WEDNESDAY, 22 JANUARY2020 16 pages in 1 section www.business-standard.com MUMBAI (CITY) ~9.00 VOLUME XXIV NUMBER 114

THE MARKETS ON TUESDAY Chg# Sensex 41,323.8 205.1 Nifty 12,169.8 54.7 COMPANIES P2 BACK PAGE P16 Nifty Futures* 12,203.1 33.3 Dollar ~71.2 ~71.1** Euro ~79.1 ~78.8** HIGH DEBT FORCES TEA FIRMS NOTHING’S DONE TO TACKLE Brentcrude ($/bbl)## 64.2## 64.7** Gold (10 gm)### ~39,854.0 ~97.0 TO PUT ESTATES ON THE BLOCK CLIMATE CRISIS: THUNBERG *(Jan) Premium on Nifty Spot; **Previous close; # Over previous close; ## At 9 pm IST; ### Market rate exclusive of VAT; Source: IBJA PUBLISHED SIMULTANEOUSLY FROM AHMEDABAD, BENGALURU, BHUBANESWAR, CHANDIGARH, CHENNAI, HYDERABAD, KOCHI, KOLKATA, LUCKNOW, MUMBAI (ALSO PRINTED IN BHOPAL), NEW DELHI AND PUNE GOVT APPROVES 100% FDI IN BHARTI AIRTEL DoT talks tough, Nadella:Backimmigrationor The Department of Telecommunications has approved raising of foreign direct investment riskmissingoutontechboom in Bharti Airtel to 100 per cent from 49 per cent allowed earlier, the company said in a telecom firms stock exchange filing on Tuesday. The AMYTHOMSON & DINA BASS technology and artificial company also has the approval of the London/Seattle, 21 January intelligence. Reserve Bank of India that allows foreign “IF WE TAKE STEPS “If we take steps back in investors to hold up to 74 per cent stake in the Microsoft Chief Executive BACK IN TRUST trust or increase transaction company. The approval comes days before sit on the fence Officer Satya Nadella said he OR INCREASE costs around technology, all we the company has to clear statutory liabilities worries that mistrust between TRANSACTION are doing is sacrificing global of up to ~35,586 crore. 5 > the US and China will increase economic growth,” he said. Telcos discuss giving January 24 deadline a miss technology costs and hurt eco- COSTS AROUND The Trump administration nomic growth at a critical time. TECHNOLOGY, ALL is considering steps to further COMPANIES P2 MEGHA MANCHANDA&SURAJEET DAS GUPTA Mathew said there were enough judi- Using the $470 billion semi- WE ARE DOING limit the ability of US compa- Brookfield, Prestige eye New Delhi, 21 January cial precedents, where the court had not conductor industry as an IS SACRIFICING nies to supply Huawei executed its order, pending further adju- example of a sector that is Technologies, China’s flagship Graphite’s ~2,500-cr land he Department of dication in the same court. He said that already globally interconnect- GLOBAL ECONOMIC tech company, in addition to Bengaluru’s top developers, such as Telecommunications (DoT) will they will continue to hold talks with DoT ed, Nadella said the two coun- GROWTH” pressuring countries around Embassy, RMZ, and Prestige Estates, and big begin issuing notices to telecom and are hopeful that no coercive action tries will have to find ways to SATYA NADELLA, CEO, MICROSOFT the world to avoid using its private equity funds, such as Canada’s T companies after the January 24 will be taken, though there has been no work together, rather than cre- equipment for 5G mobile net- Brookfield Asset Management and deadline for payment of AGR (adjusted official communication to that effect. ating different supply chains works.The agreement signed Singapore’s CapitaLand, are in talks with gross revenue) dues, set by the Supreme This view was echoed by the lawyer for each country. rate,” Nadella said in an inter- The Year Ahead conference in last week between the US and Graphite India to buy the latter’s 25 acres of Court, lapses, a senior official said. Shally Bhasin, who represented “All you are doing is increas- view with Bloomberg News Davos. That’s a concern as the China was “not sufficient,” prime land in the Karnataka capital, said This comes even as the apex court on Vodafone Idea. Bhasin told TV channels ing transaction costs for every- Editor-in-Chief John executive said the world is on said Nadella. BLOOMBERG sources. RAGHAVENDRA KAMATH reports Tuesday agreed to list the “modification that no one was going to pay the AGR body if you completely sepa- Micklethwait at Bloomberg’s the cusp of a revolution around Turn to Page 15 > petition” filed by dues and that telcos Bharti Airtel, Vodafone have requested the COMPANIES P3 Idea and Tata Group court to let them dis- Auto retail sales see FY's for “sometime next cuss the matter with week”. The firms have DoT and finalise the Analysts see FMCGrecoveryin 2020 highest fall in December sought a change to the payment plan. Retail sales of automobiles in the country 90-day deadline for However, Bharti dropped by nearly 15 per cent to 1.6 million payment of ~1.47 tril- Airtel declined to com- Nielsen predicts double-digit growth for the sector this year units in December 2019, the highest decline lion worth of AGR MIXED ment on the issue, and in the current financial year. Earlier this dues, and permission it is not clear whether it ARNAB DUTTA TRADE LOWDOWN month, the data from the Society of Indian to engage with the DoT SIGNALS will pay some money New Delhi, 21 January Automobile Manufacturers showed that on the terms and tim- upfront or follow FMCG sector growth rate total vehicle sales across categories ing of payment. VODAFONE IDEA the same line as After falling for five quarters, a recovery in growth could be Volumegrowth Price-ledgrowth registered a decline of 13.08 per cent. It is learnt that the BSE price in ~ Vodafone Idea. on the horizon for the country’s fast-moving consumer goods Valuegrowth* (in%) 9

DoT will issue notices In the case of Jio, (FMCG) sector. Both market analyst Nielsen and rating .7 15 11. 9 .0

in compliance with the which was not part of agency CRISIL say the fourth-largest FMCG market in the .5 9. 10 ECONOMY&PUBLIC AFFAIRS P5 apex court’s October the review petitions, it world will bounce back in 2020 — starting with the quarter 13 3 2 7.

24, 2019, order that is expected to pay by ending March 2020. 6.6 Asean bloc invites India 6. 8 9 8 6 4

stated that the AGR- the deadline. Jio According to Nielsen’s estimates, India’s ~4-trillion FMCG 1 3. 3. 3. 3. 3.5 3. forRCEP talks in Feb related dues need to be 21.81% declared in its recent market is expected to grow by 10 per cent in calendar year 3. India has been invited to join talks on the paid by January 24. financial results that it 2020 (CY20). In the current quarter, it could grow by 8-9 per proposed Regional Comprehensive “We cannot go BHARTI AIRTEL has estimated the lia- cent by value. This will be a significant improvement from Oct-Dec Jan-Mar Apr-Jun Jul-SepOct-Dec Economic Partnership (RCEP) next month, against the SC. BSE price in ~ bility for the period the previous quarter, when the market grew by 6.6 per cent 2018 2019 2019 2019 2019 *excludes e-commerce Sources: Nielsen, CRISIL but is still on the fence about participation, Therefore, we have to from 2010-11 to 2018-19 — the lowest in several years. Turn to Page 15 > say sources. The 10-member Association of recover dues from the at ~177 crore for licence the Southeast Asian Nations bloc has companies according fee and spectrum user invited India to Bali, Indonesia. to their order,” an offi- charges (SUC), in view cial said. He added of the SC judgment. that if the companies 0.41% Earlier, some of ECONOMY&PUBLIC AFFAIRS P6 get any relief from SC the telcos were think- Credit risks to remain next week, their pay- Source: Exchange ing of paying part of ments will be adjusted for any future the sum due — up to 20 per cent — high in India, says S&P settlement. before the deadline, as non-payment Standard and Poor’s (S&P) on Tuesday said Meanwhile, leading telecom compa- would allow DoT to encash on their the credit risks will remain high in the nies are holding hectic parleys as they bank guarantees. Indian financial sector in 2020, despite consider skipping the deadline for pay- Advocate C A Sundaram, who is rep- recognition of legacy stressed assets and ment of AGR dues. resenting a telco, said companies were infusion of capital by the government in Rajan S Mathew, director general of not disputing the payment to be made, public sector banks. Cellular Operators Association of India rather they wanted to work out a fresh (COAI), said: “I understand that most of schedule. The telcos also pushed for an the telcos may wait till the hearing open court hearing, but the CJI said that of the new petition before they make would be decided by the Bench con- > RESULTS RECKONER the payment.” cerned. Turn to Page 15 >

Quarter ended Dec 31, 2019; common sample of 103 companies (results available for 122) SALES IN RACE AGAINST CHINA, POWER Dec 31, ’18 35.7% ~3.32 trillion EQUIPMENT MAKERS SEEK GOVT HELP Dec 31, ’19 2.5% ~3.41 trillion PROFIT BEFORE TAX As nations ramp up protectionist measures, India’s exports are under Dec 31, ’18 9.7% ~52,261 cr threat from non-tariff barriers in key Dec 31, ’19 16.7% ~60,982 cr markets. With India’s exports contracting for a fifth straight month EXPORT NET PROFIT as of December, the government has LOGJAM Dec 31, ’18 4.3% ~36,443 cr asked various domestic industries to PART-1 Dec 31, ’19 28.9% ~46,991 cr identify rising restrictions placed on Indian goods by other nations. SHREYAJAI & Companies with zero sales excluded; given the change in corporation tax rates, to give a fair comparison the profit before tax has been SUBHAYAN CHAKRABORTY write 4 > considered; compiled by BS Research Bureau Source: Capitaline Duopolycatchesupinfooddelivery as ZomatoacquiresUberEats

SURAJEET DAS GUPTA & NEHA ALAWADHI theroof.Inmanycases,thelosses KEYFIGURES New Delhi, 21 January surpasstherevenues. UBER EATS The huge discounts to acquire $143 mn $20 mn $61 mn Ifthetelecomindustryrunstheriskof customers, clubbedwith high Uber’s estimated Revenue Loss becomingaduopoly, thefastgrowing deliverycostsand aggressive gain on divesting (as of Sept 30, ‘19) (as of Sept 30, ‘19) $4-billiononlinefooddeliveryspace promotions, have causedthe Sources: US SEC Filing, Uber hasalready turnedintoatwo-horse bloodbath. Even so, the customer race.CabaggregatorUberIndia’s sale numbers are impressive, helping in TOUGH ORDER ofitsfooddeliverybusinesson the subsequent funding rounds. ThedealmakesZomatoandSwiggythe two main Tuesday hasclearlysetthestagefora Indeed,cashstrappedcompanies playersin fooddeliveryin India (figuresforFY19) ZomatoversusSwiggyplay. have alwayslookedforfresh funding Zomato Swiggy Thesignsofconsolidationwere to continueto grow.Forinstance,in already thereaslossespiledup.Last thecaseofUberEats,Indiamadeup ~1,397 cr ~1,292cr year,UberIndia’s rival,Ola,whichhad formorethan3percentofitsglobal Revenue Revenue earlieracquiredFoodpanda,closed grossrevenuesinthelastthree 3x rise year-on-year 3x riseYoY downitsonlinefooddeliverybusiness quartersanditalready grabbed12per ~3,598 cr ~3,638 cr to move intocloudkitchenservices centofthemarketshare. At thesame Expenses Expenses dueto aggressive competition. time,around25percentofUberEats’ Sevenmonthslater,there’sno globallossescamefromIndiainthe ~1,001 cr* ~2,346 cr roomforathirdentityinthefight correspondingperiod. Loss Loss fordomination. Profitability,agoalpostfor 10x increaseYoY about 6x riseYoY In an all stock deal, Uber will get a investors,hasbeenamirageinthe *Adjusted for exceptional items and tax Source: Companies 9.9 per cent stake in Zomato. fooddeliverybusiness.EvenZomato, According to analysts, the value backedby Alibaba,hasbeen of the deal is in the region of $350- strugglingto makemoneywithits 400 million. lossesrisingtenfoldinMarch2019to RedSeerdatashowsthatrevenues crossthe~1,000-crore figure. Its have seensignificantgrowth—upto revenuesinthesameperiodsoared 150percentin2019—inthefood 188percentto ~1,397crore. deliverybusiness.But,losseshave hit Turn to Page 15 > 2 COMPANIES MUMBAI | WEDNESDAY, 22 JANUARY 2020 STOCKS > Can Fin Homes > Tata Steel > Spencers Retail > Granules India > KEI Industries Q3 PBT up 20% at Top loser among the Radhakishan S Damani Board approves share Q3 PBT up 29% at IN THE NEWS ~146 crore YoY S&P BSE Sensex stocks acquired 2.09% stake in buyback at ~200/share ~97 crore YoY December quarter via tender offer route

~464.10 CLOSE ~475.90 CLOSE ~89.50 CLOSE ~139.65 CLOSE ~530.55 CLOSE

* OVER PREVIOUS CLOSE 19.20% UP* 3.01% DOWN* 20.00% UP* 5.10% DOWN 2.66% UP* > . IN BRIEF Brookfield, RMZ RBI nixes Voda’s certificate High debtforces tea firms of authorisation form-pesa vie for Graphite’s The Reserve Bank of India on Tues- to put estates on the block day said it has cancelled the Certifi- ~2,500-croreland cate of Authorisation (CoA) of Vodafone m-pesa on account of Warren Tea and Jay Shree Tea & Industries latest to announce sale of estates voluntary surrender of author- RAGHAVENDRA KAMATH Emails sent to Graphite isation. Following the cancellation AVISHEK RAKSHIT Mumbai, 21 January India, RMZ, Embassy, Prestige of the CoA, the company cannot Kolkata, 21 January Estates, and CapitaLand did transact the business of issuance Some of Bengaluru’s top not elicit any response. and operation of prepaid payment ith limited funds available to developers, including Emba- Brookfield Asset Management instruments, the central bank said. sustain daily operations, the ssy, RMZ, Prestige Estates, declined to comment. However, customers or merchants having a valid claim on the comp- W financial crisis in the tea sector Salarpuria Sattva, and big pri- Interestingly, the compa- any as a PSO, can approach the company for settlement of their claims is deepening, with several companies vate equity funds, such as nies looking to buy the plot within three years from the date of cancellation i.e. by September 30, putting up their estates on sale. Canada’s Brookfield Asset have raised capital in the 2022. Vodafone m-pesa, a Payment System Operator (PSO), had This despite tea prices improving mar- Management and Singapore’s recent past. RMZ is in talks voluntarily surrendered the authorisation, it said. Last year, Vodafone ginally last year and projections of a CapitaLand, are in talks with with CPPIB, Japan’s Mitsui to Idea had decided to close m-pesa vertical following the closure of good opening this year once auctions carbon and graphite maker raise ~3,000 crore by selling Aditya Birla Idea Payments Bank Ltd (ABIPBL), with which it was being re-commence. Graphite India to buy the lat- stake in its portfolio, said merged. Vodafone m-pesa was one of the 11 firms that was given After McLeod Russel, two other tea ter’s 25-acre prime land in the reports. Singapore’s GIC payments bank licence by the RBI in 2015. PTI< majors — Warren Tea and Jay Shree Tea Karnataka capital, said invested ~434 crore in Prestige & Industries — have announced the sale sources. Estates recently. Embassy’s of their estates to pare debts and bring in The plot is in the Brook- joint venture with Blackstone Larsen & Toubro to Digit Insurance financial prudence. field area of ‘India’s Silicon raised ~4,750 crore through the Apeejay Tea also underwent an insol- Valley’. The land has develop- country’s first real estate raise ~1,000 crore gets Irdai nod to vency trial before the National Company ment potential of 3.5 million investment trust, last year. through NCDs raise $84 million Law Appellate Tribunal (NCLAT) square (sq) feet (ft) and the Sources said CapitaLand is quashed the proceedings against it. buyer can build a large office keen to build a portfolio of Larsen&Toubro(L&T)onTuesday Fairfax Group-backed Assam Company, on the other hand, complex, added the sources. office properties, including IT saiditwillraiseupto~1,000crore general insurance start-up underwent a change of hands via the The land could fetch any- parks. Singaporean sovereign throughissuanceofnon-conve- Digit Insurance on Tuesday insolvency route. where between ~2,000 crore fund GIC and CapitaLand are rtibledebentures."...theCom- said it has received approval The root cause of the stress, accord- and ~2,500 crore, informed in separate talks with Hines panyproposestoissueRated, from the Insurance Regula- ing to industry officials, is the sudden sources. “The plot is close to Real Estate, the development Listed,Unsecured,Redeemable tory and Development stoppage of lines of credit to tea planta- an upcoming Metro station manager for tile maker Nitco’s Non-ConvertibleDebentures Authority of India (Irdai) to tion companies. This has affected their and connected to the Outer land in Mumbai’s Kanjurmarg, aggregatingupto~1,000crore, raise $84 million (about ~600 cash flow. The root cause of the stress, according to industry officials, is the sudden stoppage of Ring Road. Since it has large to buy the commercial prop- onprivateplacementbasis," crore) from equity investors “After banks pulled the plug on their lines of credit to tea plantation companies. This has affected their cash flow development potential in a erty from the latter for about Larsen&Toubrosaidinaregul- A91 Partners, Faering Capital lines of credit, many plantation compa- tech zone, many top develop- ~2,000 crore. atoryfilingtotheBSE. PTI< and TVS Capital. The new nies have struggled. This move has ‘STORM’ IN ATEA CUP McLeod, which posted a ~257.15-crore net ers have evinced interest in Bengaluru absorbs the round of investment will take affected cash flow and some plantations profit during 2013-14, but a net loss of the land parcel,” said a source. highest office properties in the Digit’s total funding to $224 are not in a position to honour their Net profit/loss in ~4.42 crore last financial year. Graphite’s factory was country. It saw gross absorp- EssarExploration million (about ~1,600 crore), financial commitments,” said Razi Khan, Figures in ~ cr FY13-14 FY18-19 For McLeod, apart from prices, group located on the land parcel, tion of about 15 million sq. ft in names Pankaj Kalra the company said. PTI< director of sales and marketing at Goodricke Group 22.24 *9.49 affairs have been a drag on its balance which was shut down last 2019, an increase of 6 per cent Appejay Tea. McLeod Russel 257.15 - 4.42 sheet, resulting in a debt of around ~1,700 year. Anarock Property Cons- from 2018. CFO, strategy head Rating agencies had downgraded crore. ultants is running the man- Technology and IT- busi- Essar Global Fund on Tuesday Apollo Hospitals, their ratings for various tea companies Warren Tea 20.24 - 15.92 In the case of Goodricke, it posted date to sell the plot. ness process outsourcing sec- announced the appointment Bajaj Finserve unveil which, sources said, squeezed the flow of Rossell India 20.40 0.57 ~22.24 crore as profit in the calendar year Sources said if Embassy gets tor accounted for 39 per cent of Pankaj Kalra as chief finan- credit to tea firms. * Calendar year 2014 Source: Companies 2014, but this figure dropped to ~9.49 the land, it could tie up with its of the total leasing during the cial officer and head-strategy, health EMI card For example, ICRA downgraded term crore in FY19. Rossell India, too, had post- partner Blackstone to buy it. year, followed by the engi- Essar Exploration & Production Healthcare loans and fund-based working capital adopting alternative crops. ed a profit of ~20.40 crore during 2013-14 “Embassy, RMZ, and Prestige neering and manufacturing Ltd Mauritius. EEPLM is the major Ap- limit from BB+ with a stable outlook to “Tea prices haven't increased for the which fell to ~0.57 crore in FY19. Estates are keen on it because segment’s share at 16 per cent downstream energy arm of the ollo Hosp- BBB with a negative outlook for Warren past five years. On the other hand, the Sources said besides the larger estates they have large properties in and the flexible workspace Essar Group and a key portfolio itals on Tea, while it downgraded term loans of cost continues to increase and the offering their tea estates for sale, numer- nearby areas,” said sources. share at 15 per cent. company of EGFL. PTI< Tuesday Jay Shree from BBB+ with a stable out- majority of tea estates are now making ous single-estate plantations are up for unveiled look to BBB with a negative outlook. losses. This has created a serious imbal- grabs in Assam and the Dooars region of MEGA DEALS co-branded health EMI card Apeejay Tea also suffered a similar fate ance in the plantation business,” said West Bengal. Sanjay Kumarback in association with Bajaj with its long-term bank facilities being Vivek Goenka, executive director of “Those companies which are diversi- Biggestcommercial propertydeals in 2019 in IndiGo as chief Finance to ensure patients revised A+ to A. Warren Tea. Officials said while costs fied and have retail brands are hedged BuyerSeller Property Value (~cr) undergo hassle-free Various factors like consecutive loss- have risen by around 15-18 per cent over from plantation risks to an extent, but Blackstone Radius One BKC, Mumbai 2,600 strategy officer payment during hospit- es by certain companies, repayment obli- the past five years, tea prices shot up by pure-play plantation companies are at a AirAsia India’s former COO Sanjay alisation. “Users of this co- gations, projections of lower income, and only 5-7 per cent. huge risk”, Khan said. Shapoorji GIC-Tishman WaveRock, Hyderabad 1,800 Kumar has come back to IndiGo, branded healthcare card will overall group stress were factored in the For instance, during 2013-14, Warren McLeod and Warren Tea, as well as Pallonji-Allianz Speyer an airline he was associatedwi- be able to convert their rating revisions, besides the stress on the Tea made a net profit of ~20.24 crore and Assam Company, are pure plantation Xander NA Weikfield IT Park, Pune 900 th for more than a decade bef- medical expenditure into no tea sector. in 2018-19, it reported a net loss of ~15.92 players. Companies like Goodricke, Blackstone Indiabulls Properties in Mumbai, ore quitting in late 2018. Kumar cost EMIs that can be repaid In fact, lack of funds has been an crore. For the past three financial years, Apeejay, and Jay Shree, which have been has joined IndiGo as chief stra- over a period of 12 months,” impediment for companies to diversify the company hasn’t been making any able to evade plantation risks, have a Real EstateGurugram 810 tegy and revenue officer. PTI< officials said. PTI< into other sectors, such as tourism, or profit. Same has been the case with retail presence. Source: Companies, reports A brand of many firsts, JK Group trying to live up to its legacy

The British-era company that started as textiles importsubstitutioninthosedayshas againbecometheflavouroftheseason business has diversified significantly to become withMakeinIndia. Headded,“Wewereamongthefirst the conglomerate it is today groupsinIndiawhotrulybroughtthat concepttolife.” RUCHIKA CHITRAVANSHI acquiredasnackfoodbusiness—Fun Therewereuncertaintieseventhen. New Delhi, 21 January Flips.Itisalsoworkingonaprojecttoget Herecallsaparticularincidentof1980 intotheback-endofthefoodprocessing whenonemorninghefoundthathis Lastyear,astheJKGroupcelebratedits industry. three-year-oldRajasthantyreplanthad 135thfounder’s day, itwasalsoapersonal Whytheshift?Whileonereasonthe gotshutduetoanunprecedentedpower milestoneforitspatriarchRaghupati companyfeelsisthattheconsumerside cutinthestate.“Inthelast50years, Singhania,whoseassociationwiththe ofthebusinessisgrowingatafasterpace, accordingtodata,wehadchecked companynearedthe50-yearmark. theotherhastodowithfasterreturnson Rajasthanhadarecordofzeropowercuts. Fromthetimehejoinedthe investments. So,wedidnotevenputupgenerators...We companyin1970atayoungage Harshpati,managing wereaghast.” of22,Raghupatilearnt director, JKGroup,said,“Costof Raghupati,alongwithhisbrother, everythingonthejob. moneyinIndiaisfairlyhigh.Ina thenlocatedfourgeneratorsof4mega Hegotsoengrossedinthe capital-intensivebusinessesyou watteachintheUSandairfreightedthem dailyworksofthegroupandits makebiginvestmentsandthen bycharteringtwojumbojets.Within21 rapidexpansionacross DELHI waitseveralyearsbeforeyoustart days,theplantwasbackinbusiness.“Iam diversifiedsectorsthathisplan gettingreturnsoutofthatand tryingtoillustratethatchallengescome ofpursuinganMBAfromMIT BUSINESS thenyouinvestagain.Asagroup, yourwaybutyou’vegottoadaptandfind didnotmaterialise. HOUSES becausewearediversified,weare asolution.Youcannotaffordtofail,”he However, thesenior PART-3 tryingtoaskourselveswhatare said. Singhaniaisnowbusypassing lesscapitalintensivebusinesses.” Over13yearsago, theJKGroup onalltheknowledgehegatheredoverhalf NaushadForbes,formerchairmanof Raghupati Singhania (left), vice-president; and Harshpati Singhania, director, FINANCIALHEALTH underwentacorporaterestructuringto acenturytohisgrandson,Chaitanya Hari CIIandchairmanofForbesMarshall,said JK Organisation PHOTO: SANJAY SHARMA havemorefocusonmanufacturing Singhania,aYalegraduate,whoistheson manyoftheoldfamily-runbusinesses NET WORTH (~ CR) companiesanduntanglecrossholdings. ofhisnephewHarshpatiSinghania. startedinthecommoditysectorandlater improved.However, wehavecontinuous Lastyear,theJKGroupacquiredthe 2017-18 2018-19 2018-19 “Eachbusinessnowisadifferent “Theyounggenerationisbetter gotintomoreconsumerfacing growthplans,”theseniorSinghaniasaid. ailingSirpurPaperMillthroughthe company, differentverticaland qualifiedthanmeinasense...But businesses. Thegroup,withatotalrevenueof corporateinsolvencyresolutionprocess. management,”hesaid. groomingisahands-onexperience.We “Ithashelped ~26,000crore,hasdoubled Theincreaseindemandforitspaper 2,284 Thenextbigdreamforthe 2,038 haveallbeengroomedonthejob,” companiescreatebrand profitsandincreasedsales productsfromthepharma,cosmeticsand 1,965 1,961 septuagenarianistobecomeamarket

Raghupatisaid. value.Companiessuchas by70percent,inthelast ecommerceindustrieshasencouraged 1,643 leaderinallsectorsithasapresence.“We 1,485

INACAPITAL-INTENSIVE 1,444 1,401

TheBritish-eracompany, which theJKGroupshouldnot fiveyears.Asthecompany thecompanytosetupanewpaperboard 1,321 wanttoexcelinwhatwedo.Itdoesnot startedastextilesbusiness,has bejudgedbythebusiness BUSINESSES,YOUMAKEBIG planstoinvest‘judiciously’ plantandapulpmillwithanoverall meanwewanttobethelargest.” diversifiedsignificantlyintoother theystartedwithbutthe INVESTMENTSANDTHENWAIT inviewofthecurrent investmentofover~1,700crore. To achieve this, although the businessestobecometheconglomerateit areastheygotintomuch SEVERALYEARSBEFOREYOU slowdownintheeconomy, Inthecementbusiness,thecompany JKTyre &JKPaper JKLakshmi Singhania family is highly involved in istoday. later,” hesaid.Hesaidthat STARTGETTINGRETURNSOUTOF ithashadtoputonhold recentlyrevivedandrecommissioned Industries Cement the functioning of the group such as TheStreetinwhichthecompany theoldercompanies someofitsplans. oneofitsplantsinRajasthan. strategic planning, setting a direction THATANDTHENYOUINVEST PROFIT AFTER TAX(~ cr) headquarterssitshasadistinctstampof learnttocompeteinthe Forinstance,its~1,000 “Whileitisanongoingprocess,inthe JK Tyre & JK Paper JK Lakshmi and financial aspects. It has hired a oneofitsmostsuccessfuloperations,JK licencerajandsomeof AGAIN.SINCEWEARE croreinvestmentin lasttwoyears,wehavefocusedalotof Industries Cement team of professionals from the best of Tyre,whichmakesupoverathirdofits themcouldtransitioninto DIVERSIFIED,WEAREASKING boostingitstruckradial attentioninternallytoimproveour global universities to run the group. totalrevenues. atimewherethereisso capacityhasbeen efficiency. Notjusttheslowdown,butalso 2017 375 172 86 “We are an interesting hybrid of family ThenearestMetrostationofITOwears muchglobaland OURSELVESWHATARELESS postponedbytwoyears thetechnologyisnowaffordingusan 2018 66 261 55 and professionals. Each company is thebrandnameandcoloursofJKTyre– domesticcompetition. CAPITAL-INTENSIVEBUSINESSES” duetotheslowdown.“In opportunity,” Harshpatisaid. 2019 176 427 51 run by professionals on a day-to-day yellowandblack.Mostvendorsonthe Overthepastfew ordertohelpourselves,we Deployingtechnologysuchas basis...We don’t interfere in that,” HARSHPATI SINGHANIA NET SALES ( ~ cr) streetgoabouttheirbusinesssitting years,theJKGrouphas haveputabiggerthrustin automatedsensorsandmachineryinits 2017 7,689 2,881 2,922 Raghupati said. undertheshadeoftheJKGroup enteredintothedairy Managing director, JK Group thereplacementmarket factories,thecompany, initstyreand Thegroup,asawhole,employsnearly umbrella. industryandhybridseeds anddoubledourpushon cementbusiness,hasstartedgeotagging 2018 8,272 3,088 3,748 35,000people.Goingforward,theideais Onitsotherbusiness,includingauto business. exports.Thereiscertainlyaconcernbut itscustomersanddealers.Throughthis,it 2019 10,370 3,492 4,316 minimaladditiontoworkforceandmore components,Raghupati says,“Thereis Inthelastfiveyears,theconglomerate marketgrowthshouldcomeback,” isheatmappingclusterstobetter Compiled by BS Research Bureau Source: Capitaline andmoretechnologydeployment. notavehicleinIndiawithoutaJK hasinvestedover~8,500croreandlined Harshpatisaid. understanditscustomerneedsand AsforRaghupati himself,thereare product.” upanother~6,000to~7,000crore Fornow, besidesthetyrebusiness, improveprocesses. fourwheelersinIndiawaybackinthe noplanstohangtheboots,justyet.“Let’s However, thenextgoalistogobeyond investmentstill2023-24,subjecttothe therearethreemainfocusareasthe “Wearecontinuouslyreinventing 1970s,”Harshpatisaid. seehowlongIsurvive,”hesaid. itsusualcapitalintensivebusinessesand presentstateoftheeconomy. companyisbettingon–paper,cement ourselvesintermsofeveryproductwe The1970seraoftheJKGroupisstill FortheJKGroup,whichpridesitselfin getintosomethingmoreconsumer “Youwouldappreciatethatwewould andJKFenner,whichisinto make,whetherit’styresorpaper.We were somethingseniorSinghania(Raghupati) manyfirsts,thechallengenowistoliveup facing.To thiseffect,thegroupjust notputthemoneyuntilandunlessthings manufacturingautocomponents. thefirsttointroduceradialtechnologyfor drawsinspirationfrom.Itssloganof toitsownlegacy. MUMBAI | WEDNESDAY, 22 JANUARY 2020 COMPANIES 3

. < Hyundai buckles up AutosalesseeFY’s steepestfallinDecember T E NARASIMHAN HITTING THE BRAKES Chennai, 21 January Auto exports rise 3.9% in Apr-Dec Cateogry Dec ‘18 Dec ‘19YoY (%) amid slide in domestic sales to ace diesel space Sales of automobiles in the Two-wheeler1,500,545 1,264,169 -16 country dropped nearly 15 Overall auto exports from the co- to new safety norms, higher per cent to 1,606,002 units in Three-wheeler58,031 58,324 1 untry rose 3.9 per cent year-on- insurance costs, higher ow- ROLLS OUT December 2019, the steepest Commercial vehicle 85,833 67,793 -21 year (YoY) between April and nership costs, liquidity crisis in decline in the current finan- Passenger vehicle 236,586 215,716 -9 December of FY20, despite the the NBFC (Non-Banking Fina- cial year. continuing depressing senti- ncial Companies) sector, reduced COMPACT SEDAN Earlier, the Society of Total1,880,995 1,606,002 -15 ment in sales. A report by CARE turnaround time and increased Indian Automobile Source: FADA Ratings shows that automobile load carrying capacity for com- AURA AT ~6 LAKH Manufacturers (Siam), which units from 85,833 units, two- best offers being available. sales witnessed the steepest mercial vehicles led to higher monitors wholesale data, wheeler sales dropped by 16 The federation expressed decline of 12.8 per cent YoY in the inventories and slow movement MARUTI HAS showed that total vehicle per cent to 1,264,169 units concern on falling auto sales past five years during April- in segment sales. That apart, sales across categories regis- from 1,500,545 units. and shifted its stance to ‘very December. Sales plummeted as lower farm wage growth led by SIGNALLED TO QUIT tered a decline of 13.08 per Passenger car sales dropped cautious’ for near and mid price hikes of passenger vehicles uneven rainfall hurt rural cent to 1,405,776 units from nine per cent to 215,716 units term as the industry moves and two-wheeler segments due spending. JAYAJIT DASH THE SEGMENT 167,398 units in December from 236,586 units. towards BS-VI transition. 2018. FADA President Ashish “The sharp decline in FADA, which represents the rent business and ensure sell- ARINDAM MAJUMDER The Federation of Auto- Harsharaj Kale said growth has denied the dealer dealer community, said it will ing entire BS-IV inventory by New Delhi, 21 January mobile Dealers Associations December sales de-growth community an opportunity work towards seeking relief March 31. (FADA) data shows that total was not on expected lines as to reduce BS-IV inventory, from the Supreme Court on Kale said, although there ricing the Aura at less vehicle registrations dropped enquiry levels all through the making the transition to BS- BS-IV inventory with its was a slight reduction across than ~6 lakh, South to 1,606,002 units in month were quite robust. VI trickier. With such a weak members. With such weak all segments, CV and two- P Korean carmaker S S Kim, MD & CEO, Hyundai Motor India, at the launch of December 2019 from Consumer sentiment cont- consumer sentiment, FADA consumer demand, near- wheeler inventory still Hyundai took a firm step to Hyundai Aura in New Delhi on Tuesday PHOTO:SANJAY K SHARMA 1,880,995 units a year ago. inues to be very weak as cu- recommends a very cautious term retail sales are unpre- remains a concern, especially grab market share in the com- While commercial vehicle stomers did not conclude approach to its members with dictable. This makes it looking at the transition and pact sedan segment, which Our procurement and which includes sedans and (CV) sales were the worst hit, their purchase even after serious focus on BS-IV inven- extremely difficult for FADA’s the current weakness in has so long been ruled by research and development sport utility vehicles smaller down by 21 per cent to 67,793 enquiring and despite the tory liquidation,” said Kale. members to continue the cur- demand. rival Maruti Suzuki. did an excellent job to con- than 4 metres. With India’s largest car- trol costs. The price of the “Yes, there is a feeling that maker deciding to quit the Aura is a reflection of that ini- diesel may not be popular in diesel segment, Hyundai feels tiative and effort,” said S S the entry-level segment. But it can rule the segment, th- Kim, chief executive officer there is still a 30-40 per cent Over 70 new launches anks to its efficient engineer- and managing director, market for diesel in the sub-4 ing and economy of scale. Hyundai Motor India. metre segment in personal From April 1, Bharat Stage For long, Hyundai has vehicles. That segment is up at upcoming Auto Expo (BS)-VI emission norms for been unable to crack the seg- for grabs because those cus- automobiles will become ma- ment due to Maruti Suzuki’s tomers will be looking for a Despite slowdown in the auto- GreatWall, will mark their foray ndatory across the country. strong product portfolio. good diesel option. We have mobile sector, more of new mod- this year. Other major Chinese Passenger vehiclemakers, su- According to the data been able to develop a 1.2-litre el launches are expected at the companies include BYD and ch as Maruti Suzuki India, from the industry, the Indo- with good emission and full biennial automotive industry Haima. Volkswagen, Skoda and Mahindra & Mahindra, Tata Japanese carmaker’s product efficiency. Now, the Aura will show, Auto Expo 2020, starting Nissan, which did not come in Motors, Toyota Kirloskar Swift Dzire has a 55 percent be the only diesel vehicle in February 7 in Greater Noida, as 2018, will now do so, said Sugato Motor, Volkswagen India, market share of the segment. the compact segment,” said compared to last year. Sen, deputy DG at Siam. and Renault India, have With Maruti opting to quit Tarun Garg, director (sales The number of such launches On the allegation by some of a announced plans to pull the the diesel segment, Hyundai and marketing), Hyundai. is expected to cross 70, indicate lack of return on the investment in plug on smaller diesel vari- feels the Aura will provide However, experts warned members from the Society of showcasing at the Expo, the DG ants (those powered by 1.2- customers the option to shift that the scope of making Indian Automobile Manu- said the rentals had not changed 1.3-litre engines) due to the from Dzire. money in that segment is facturers (Siam). Also, non-Siam for the past five editions. Customer high cost of transition from “The overall diesel sales extremely limited for auto- numbers (including Chinese sentiment is weak, though sales BS-IV to BS-VI. reflect the changes, except makers, but Hyundai’s econ- ones) would launch or showcase in the December quarter were According to industry that the percentage of sale of omy of scale — thanks to its dozens of others. In the 2018 Expo, slightly better as compared to the estimates, the prices of small- diesel in the industry has been presence in multiple markets the total number, from Siam earlier two. One reason is new er BS-VI-compliant diesel sliding. In the first half, it has — may give it the edge. members and others, was around launches, said Menon. cars could rise by ~1.3 lakh to come down to almost 22 per “The market share and 85. All these should improve cus- On the companies staying ~1.5 lakh per unit. Most car- cent for Maruti, and for the profit may not be in tandem tomer sentiment, and in turn a away from the Expo, he said the makers believe buyers will industry overall, it has come for the compact sedan seg- rise in sales, said Rajesh Menon, industry was in difficult times not loosen purse strings. down from 38 per cent to 33 ment because companies find director-general (DG) of Siam. It and many of these were preoc- “While the prices of BS-VI per cent,” said Shashank it difficult to maximise profit. appears 10-odd global launches, cupied with business challenges. diesel vehicles will rise, we Srivastava, executive director However, a global company 26 India launches, six concept He said the participants would are trying to ensure this (marketing and sales), Maruti with volumes and expertise vehicles, seven facelifts and 21 account for nearly 85 per cent of increase will be tolerable. We Suzuki. can really make the most of it, unveilings (only display) are passenger car sales in the coun- are trying to reduce the But Hyundai instead is if the pricing is correct,” said planned. The largest occupant try; in the commercial vehicle expected burden on con- looking to monopolise the Kavan Mukhtyar, partner and will be Tata Motors. Some segment, 75 per cent. sumers by rationalising costs. compact diesel car segment, leader-automotive, PwC India. Chinese companies, including T E NARASIMHAN 4 ECONOMY & PUBLIC AFFAIRS MUMBAI | WEDNESDAY, 22 JANUARY 2020 “You (Nitish Kumar) mentioned that the BJP was leading “Reality checkfrom IMF. Growth in “The Opposition is giving moneyfor arson and India into a dangerous space. If these are your real views, I 2019-20 will be below5% at 4.8%. sponsoring sit-ins and agitations against the CAA fail to understand howthe JD(U) is extending its alliance Even the 4.8% is aftersome window to mislead people. But the people have stood with the BJP beyond Bihar, when even long-standing allies dressing. I will not be surprised if behind Prime Minister Narendra Modi and against of the BJP like the Akali Dal have refused to do so” it goes even lower” those who speakthe language of our enemies” PAVAN VARMA, JD(U) leader, in a two-page letter to party chief P CHIDAMBARAM , Senior Congress leader, in a tweet YOGI ADITYANATH, Uttar Pradesh chief minister

> . IN BRIEF China coronavirus: 7 airports All eyes on taxreceipts as mop-up dips to conductthermal screening TAXREVENUE INDIVJALDHASMANA The civil aviation ministry has New Delhi, 21 January (A CUT IN directed seven airports — Delhi, Budget Estimates Actual ; (Difference in bracket) (All figures in ~ trillion) PERSONAL INCOME Mumbai, Kolkata, Chennai, ith just days to go before the Union Budget 2020-21 is pre- Bengaluru, Hyderabad, and Cochin sented, all eyes are on tax receipts for the current fiscal year TAX IS) ONE AMONG THE — to make arrangements for (-0.17) (0.47) (-0.53) (-0.42) (-0.97) (-1.20) (0.70) (0.85) (0.08) (1.91) W (April 2019-March 2020, or FY20) which would be revised MANY THINGS WE ARE screening of passengers arriving in the Budget. The numbers become all the more important because from China in the wake of outbreak actual tax collections fell short by ~1.91 trillion, compared to what was LOOKING AT”

of an infection caused by a new strain of virus (coronavirus) there. 24.61 projected in 2018-19. 19.19 19.11

Airlines flying in from any airport in China have been asked to make 22.71 Besides, the Budget for FY20 did not give actual figures for 17.16 20.8 in-flight announcements, requesting passengers to self-declare on 16.31 2018-19, but the revised numbers given in the interim Budget. The

arrival. The virus brought this year’s global rally to a halt on Tuesday, 14.56 actual numbers missed the Revised Estimates figures by ~1.68 tril- 14.49 hammering Asian equities and dragging both European and US 13.64 lion in 2018-19. The growth projected in revenue collections was 12.44 12.36

< 11.65* stocks lower. FTSE 100 suffered its worst day in two weeks. AGENCIES 11.39 just 9.47 per cent for FY20, compared to the Revised Estimates of 10.36 10.78 2018-19. However, it meant a growth of 18.31 per cent, compared 9.32 8.89 to the actual numbers of FY19. 7.93

Govt considering Axis Bank initiates 7.46

6.41 The first year of the Modi government in the previous stint (2014- 6.24 lifting ban on insolvency process 2019) also registered a fall of over ~1 trillion, compared to initial pro- onion exports againstRPowerarm jections for tax collections. Then finance minister Arun Jaitley had blamed it on his predecessor P Chidambaram whose numbers in the The government may lift ban Reliance Power on Tuesday interim Budget were taken as it is by Jaitley. However, the interim on exports of onion as fresh said one of its lenders Axis ‘09-10 ‘10-11 ‘11-12 ‘12-13 ‘13-14 ‘14-15 ‘15-16 ‘16-17 ‘17-18 ‘18-19 ‘19-20 Budget this time was presented by the Bharatiya Janata Party gov- NIRMALA SITHARAMAN arrival of the commodity has Bank has initiated insolvency ernment, with Piyush Goyal as the finance minister. Finance minister * (till November 2019) Sources: Budgets, Controller General of Accounts started softening its prices in process against its subsidiary the domestic market, an Vidarbha Industries Power for official said. “Fresh onion a claim of ~553.28 crore. PTI< will soften the prices here,” Here’s howthe‘winners’ value of agri commo- the official said. PTI< dities and processed food AirIndia sets up AGRICULTURE jumped 7% in 2019 Rethink powers of panel to look into Erraticweatherpatterns employees' issues fromlastBudgetfared disruptedagriactivities Speaker in deciding Budget Production is expected Air India on Tuesday set up a KARTHIKEYAN SUNDARAM that’s done little to boost credit ers including SpiceJet, to decline for most crops pleas, SC tells Parl nine-member committee to New Delhi, 21 January growth, which is at a three-year InterGlobe Aviation and TATA as compared to the The Supreme Court said look into staff-related issues low and has weighed on prof- SIA Airlines are yet to see any 2020-21 previous years Parliament should “rethink” in the wake of proposed From banks to farmers to the itability of banks, including State real benefits. At the same time, whether the Speaker of a disinvestment of the carrier, property market, the gains Bank of India. the economic slowdown has WISH LIST Cereals and food grains are expected to have a House should continue to according to a notification. PTI< from July Budget haven’t yet meant local air traffic has been have powers to disqualify panned out as expected. Rural India growing at low single digits surplus production, while pulses and oilseeds lawmakers as such a In her maiden budget six The July Budget gave bigger from double-digits previously. declined from 6.3% in functionary “belongs to a Slowdown to hit months ago, Finance Minister allocations for rural housing, At a glance will be short in supply as Water 2017 to 2.9% in 2019 compared to demand, in particular political party”.PTI< (FM) Nirmala Sitharaman roads and programmes that Agriculture and allied insurance premium Export in terms of the coming decade collections: Moody’s pledged to boost revenue col- support small businesses pro- A plan to provide piped water sector GVA growth rate PM to chair32nd lection by 13 per cent, narrow ducing cattle feed, measures to households across the coun- Despite low penetration, the the fiscal deficit to 3.3 per cent that were seen buoying compa- try by 2024 was seen benefit- Key challenges EXPORT OF TOP AGRICULTURALCOMMODITIES FROM Pragati review economic slowdown will of gross domestic product and nies like Hindustan Unilever, ing companies such as Shakti impact insurance premium spur the economy to $3 tril- ITC and Mahindra & Mahindra. Pumps India, Jain Irrigation Agri-insurance scheme INDIA IN PAST 2 YEARS 2017-18 F2018-19 (~ cr) meettoday collections over the next two lion by March. Things haven’t However, the slump in con- Systems, Kirloskar Brothers, (PMFBY) is facing issues 50,000 PM Narendra Modi will on to three years, Moody's Inve- gone according to plan sumption has hit the rural sec- VA Tech Wabag and PI Capacity utilisation in 40,000 Wednesday review the stors Service said on Tuesday. though, largely because of a tor hard. Unilever, the parent of Industries. Given the long ges- edible oil refining has 30,000 progress of various projects The total insurance premium worsening slowdown in the Hindustan Unilever, cited tation period of the pro- decreased from 65% to 20,000 in the 32nd meeting of collected slowed down marg- economy. As the FM prepares India’s slowdown as a reason gramme, any gains are yet to 46% in five years 10,000 'Pragati', a multi-modal inally for the year-ended to deliver her second Budget, for its weaker growth outlook. reflect in the stock prices of High-yielding cattle platform for proactive March 2019, while the dip in here’s a look at how the expect- Carmakers like Mahindra, most of those companies. 0 can be developed by Buffalo Basmati Non-basmati Marine Fresh governance and timely growth was much sharper for ed winners from last year’s fis- which sells SUVs and tractors, meat rice rice products fruits & veggies Real estate & construction using high quality sorted implementation. PTI< general insurance, it said. PTI< cal plan fared: have also suffered from declin- semen or live ing vehicle sales. Godrej The Budget outlined plans to embryos promote indige- Export needs to be State-run banks Agrovet, a local animal feed build 19.5 million rural homes nous edible oil supported through Climate change In July, Sitharaman said the gov- and edible oil producer, by 2022 and continue the gov- awareness programmes and bio-security Regulatory ernment would inject 70,000 bucked the trend. ernment’s focus on road con- GUJARAT REPLACES BENGALAS affect agri mechanism for Start-ups and ag-tech crore of capital into state-run struction — steps that would import of high- promotion Aviation Only 52% of the TOP GOVERNING STATE: STUDY banks, including Union Bank of help builders like Larsen & quality semen and potential of A multi-faceted, syste- India, Bank of Baroda and The government’s plan to con- Toubro, Dilip Buildcon, IRB live-embryo for inland fishery has mic approach needed for Canara Bank. In August, the sider further opening up for- Infrastructure, GMR livestock needs to be climate change issue government followed up by eign investment in aviation Infrastructure, Oberoi Realty, been realised so far simplified There is a need for announcing the biggest-ever and forming an aircraft financ- and DLF. But domestic orders Need improvement in planning in sowing, consolidation of banks it con- ing and leasing company continue to be affected by the Industry-ask fishing gear, infra for connecting various trols to spur lending. However, remain incomplete, and carri- slowdown. BLOOMBERG PMFBY needs to be deep sea fishing, markets digitally for a revamped in terms of collection, storage and better price discovery design traceability of harvest, mechanism, and regular and processing of aqua Gujarat replaced West 2017 2018 2019 No plan to raise alcohol duty: Govt Both short- and long- flow of marketable term measures needed to produce surplus Bengal as the top Gujarat135 1 governed state in the Maharashtra 38 2 SUBHAYAN CHAKRABORTY ment is going ahead with a move to place restric- 2019 Skoch rankings. New Delhi, 21 January tions on 371 items ranging from toys, plastic PwCPOINTOFVIEW INDUSTRY VOICE W Bengal913 While there are 22 goods, sports items and furniture, after they were Andhra Pradesh102 4 There is no proposal to raise overall import duty categorised as “non-essential”. “There is a “Looking at this parameters that go huge potential sector holistic- into the overall Tamil Nadu 617 5 on foreign alcohol, government sources The latest information is expected AJAY KAKRA for investment SHAILENDRA said, days after news broke that the to calm the nerves of alcohol ally across the ranking, health and Telangana 22 6 Leader-Food in various sub- JAGTAP value chain, government plans to limit the purchase Importers importers who had panicked after sectors across cleanliness dominated Madhya Pradesh710 7 andAgriculture, MD & CEO, addressing of alcohol at duty-free shops. were waiting rumours about the government plan- thematic areas the good governance PwCIndia every stage Karnataka 11 11 8 The commerce department has forclarityon ning to restrict overall alcohol sales like insurance, John Deere initiatives across the from farm to Haryana 414 9 reportedly suggested to the finance govt’s plan to spread. marketing India country in 2019, says infrastructure, fork, shall Odisha 12 13 10 ministry that the upcoming Budget restrict overall As of now, strong alcohol, includ- cold chain and prove the report. Poll-bound prohibit purchase of cigarette cartons at alcohol sales ing vodka, whiskey and liqueur, Delhi was at the 19th food processing. Policy thrusts in the right beneficial. The entire crop diversification duty-free shops. spread among others, attract a basic customs area can improve sector’s performance. needs a robust incentive and implementa- place, lower than 15th spot it occupied in the previous two Officials say the move is to crack duty of 150 per cent along with other However, climate change poses a huge tion plan. Climate issues are rising. This years. Delhi is ranked fifth on the parameter of health, one down on the import of non-essential charges, while beer has a customs threat and needs to be countered with a brings opportunities in areas such as R&D, of its main claims of governance INDIVJALDHASMANA items, but large-scale import duty hikes are not duty of 100 per cent. Import of alcohol has grown robust policy and agri infrastructure” Innovation, AI, ML, remote sensing, etc. Source: Skoch state of governance, 2019 planned at the moment. Instead, the govern- over the past couple of years. Source: PWC InraceagainstChina,powerequipmentmakersseekgovthelp The first of a three-part series on export hurdles looks at how India’s high-value power equipment exports to China have been hit by bureaucratic obstacles SHREYAJAI & SUBHAYAN CHAKRABORTY faced by the entire value chain of a allowed in India and other countries, and cost involved, it becomes next to New Delhi, 21 January product, such as inverted duties, TRADE IMBALANCE and are used by foreign companies to impossible for Indian industry to dumping or unfair subsidies. Chinese electricals pour in, but fewIndian exports find their wayto China access the local market. take the CCC (China Compulsory An Indian electric equipment maker In response, the Indian Electrical The gap between what India “Electrical machinery provided Certification),” said the note. recently spent six months translating and Electronics Manufacturing imports and exports globally the initial impetus to Chinese IEEMA has also complained that from Mandarin to English all the Association (IEEMA), the representa- exports post the country joining the China does not recognise quality certifi- documents and allied rules, laws and tive body for the industry, has submit- Imports Exports ($ bn) World Trade Organization in 2000. cates issued by the Central Power regulations of a tender floated by the ted a note to the Piyush Goyal-led 60 As a result, the firms in the sector Research Institute (CPRI), a body under 52.0 State Grid Corporation of China. department on the non-tariff barriers 48.2 enjoy special privileges from their the ministry of power. But it is not only “We realised that none of the con- they face in the countries they export 45 government in the form of tax China —more than 30 ditions favoured our participation. to. The biggest complaints are against 38.5 35.2 rebates and political patronage,” said countries do not recognise CPRI as a Our request for a translated copy of China. Business Standard has accessed 30 a senior official who has worked on testing agency and ask for quality cer- the tender fell on deaf ears. the note and a copy of a tender Chinese trade flows. tificates from international laboratories Moreover, if I was eligible floated by the State Grid 15 “There is a chance that more non- outside India. These include Oman, under one criterion, I wasn’t Corporation Limited of China. Imports 21.9 28.6 20.6 14.0 tariff barriers may be deployed by Mexico, Malaysia, Argentina, Kuwait, meeting the sub-criteria. It’s a The concerns of the domes- from China 12.7 China now that the Regional United Arab Emirates and even neigh- 8.2 9.3 10.0 0 mesh of rules to prevent tic industry are not unjustified. Exports Comprehensive Economic Partnership bours Bangladesh, Nepal and Sri Lanka. 0.39 0.47 0.57 0.54 2016-172017-18 2018-19 2019-20* Indian companies from enter- Manufacturers say that Chinese to China deal has gone sour. The mega trade The industry body has requested ing the Chinese market while imports in power, renewable ($ bn) 2016-172017-18 2018-19 2019-20* * (Apr-Dec) Source : Commerce department deal would have allowed China a much the commerce ministry to make certi- they continue to flood our EXPORT and electric equipment sectors larger market access to India,” said fication by Indian agencies compul- market,” said a senior execu- LOGJAM have flooded the Indian market European countries such as Germany, “This makes it difficult for us to trade expert and Jawaharlal Nehru sory for imports into India. “IEEMA tive of the company men- PART-1 because of lax rules, which they France and Italy. As for China, it is understand the fine print and terms University professor Biswajit Dhar. requests mandatory third party test- tioned above. feel should be addressed. As the world’s largest producer and and conditions. Moreover, the terms China could be sending a message to ing requirements and Bureau of At a time when global trade growth Chinese exporters get sovereign sup- exporter of electrical machinery, and are so strenuous that it is difficult for New Delhi, apart from protecting its Indian Standards (BIS) certification remains slow, exports from India face port in the form of preferential ten- accounted for more than a fifth of the Indian companies to participate,” own market, he added. while importing electrical products restrictions in the form of harsher san- ders, Indian companies say the same total global electrical exports in 2016. said an industry executive. China also mandates that foreign from these countries as a reciprocal itary and phytosanitary rules, stricter should be done in India, too. IEEMA has listed several issues China’s tender specifications man- manufacturers get a quality certifi- measure,” said the note. standards, labelling requirements and The estimated market size of with the tenders floated by Chinese date that participating companies be cate from it. Industry executives say The Directorate General of Foreign import controls in key markets. India’s electrical industry is ~2.08 tril- state-owned power companies for legally registered in that country. Bids this is an impossible exercise in the Trade is expected to take up the Reacting to complaints from lion. In 2018-19, exports of IEEMA’s procuring equipment. One of the placed through a joint venture with a case of 90 per cent of the equipment, issues with its Chinese counterpart exporters, the Union Commerce member companies stood at ~21,235 main grievances is that the tender is Chinese company or through an as they cannot be physically carried soon, a senior official said. Department has asked industry bod- crore, most of which was to China, always in Mandarin and no copy is agency tenderer are not accepted. Yet, to China. “Due to the language barri- ies to map out the problems being Japan, Korea, the US, Russia and available in English, even on request. as IEEMA points out, these are er, cumbersome procedures, the time Next: Agriculture MUMBAI | WEDNESDAY, 22 JANUARY 2020 ECONOMY 5

. < Irdai defers execution IT firms stare at Asean bloc invite India for of IndAS in insurance RCEPdialoguenextmonth sector revenue loss as SUBRATA KUMAR PANDA has taken a considered But govt yet to take a call on participation Mumbai, 21 January view to amend IFRS 17. The IASB has indicat- SUBHAYAN CHAKRABORTY The Insurance ed that it aims to issue New Delhi, 21 January WHAT INDIA WANTED, Regulatory and the final amendments core bizfalters BUT DIDN’T GET Development in mid-2020,” the reg- India has been extended an invita- Authority of India ulator said. tion to join talks on the proposed (Irdai) has decided to While the equiva- While Infosys, Wipro saw their revenues from core segment Regional Comprehensive Economic defer the implemen- lent standard of IFRS Partnership (RCEP) next month, but tation of Ind AS 17 is yet to be notified declining in Q3; TCS has discontinued giving figures is still on the fence about participa- (Indian Accounting in India, after the final tion, say sources. Standards) in the standard is notified by DEBASIS MOHAPATRA The 10-member Association of the insurance sector until the IASB, the corre- Bengaluru, 21 January Southeast Asian Nations (Asean) bloc the International sponding standard in has invited India to Bali, Indonesia, Accounting Standards India will have to be ndian IT services firms will for RCEP talks on February 3-4. Board (IASB) issues notified by the min- increasingly find it difficult The Asean secretariat hopes the Major issues and What it would have meant final amendment to istry of corporate I in posting double-digit meet may be able to iron out existing International affairs (MCA). IMPORT CAP FORCHINA 2019 TARIFF BASE YEAR growth as revenues from their wrinkles raised by India. Since there MechanismtoraisetariffsonChinese Tariffswouldhavebeenslashedon Financial Reporting “Once the stan- core application development had been no significant progress on importsifitcrossedcertainthreshold prevailingdutiesin‘19,others Standard 17 (IFRS 17). dard equivalent to and maintenance business con- the matter over the past two years on wanted‘14 The regulator had IFRS 17 is notified in tinue to decline. This is, despite TECH TALK most issues, New Delhi is yet to MORE TRADE IN SERVICES planned to imple- India, Irdai will be in a the fact that digital revenues decide on the invite, an official said. CrossbordermovementofIndianIT, NO MFN COMMITMENT ment IndAS 117, which position to notify the now constitute 40 per cent of TCS* Infosys Wipro (Q3FY20 in %) The RCEP is a proposed pact medicalworkers,teachers Indiawouldhavehadto is an equivalent of regulations on the their top line, at least 10 per- between 10 Asean economies and six givesimilarbenefitstoall IFRS 17, and IndAS preparation of Ind AS- 60.0 centage point increase over the 59.4 others (New Zealand, Australia, ASSURANCE ON MARKET ACCESS nationsirrespectiveofearlier 109 from April 1 compliant financial past one year. 40.6 40.0 41.0 China, India, Japan, and South Korea) PreferentialaccesstoIndiangoods tradedeals onwards, but the IASB statements. Several Experts are of the opinion with which the grouping currently inChinese,Aseanmarkets decided to amend other regulations that that though digital services hold 23.0 has free-trade agreements. IFRS 17. may be impacted the future, the companies are In November last year, the "While the insur- because of the imple- likely to take a hit during the 6.8 9.5 Narendra Modi government had “Participating countries have con- ing an onslaught on imports from ance sector was mentation of IFRS 17 3.3 transition period. NA NA NA NA -5.0 NA announced it was pulling back from cluded text-based negotiations for all China and other nations. But other preparing to imple- may also have to be “While the pressure on tra- RCEP talks, arguing doing so would 20 chapters and essentially all their sectors, such as textiles and pharma, ment Ind AS, it was modified appropriate- ditional services is extremely Total revenueGrowth of Total revenueGrowth in Overall adversely affect national interest. market-access issues,” said the joint had supported India’s participation, noted that the IASB ly”, Irdai said. high, we are not in position to (Digital) digital revenue(core) traditional revenuerevenue Modi had informed the other lead- statement issued after a meeting of citing the deal provides access to the judge the speed of decline as of *TCS discontinued the practice of giving separate revenue numbers on digital ers that the deal in its latest form RCEP leaders. huge Chinese consumer market. now. However, there is a clear from Q3FY20 Source: Companies “does not fully reflect the basic spirit “All RCEP countries will work NITI Aayog had pointed out that message that the overlap betw- and the agreed guiding principles of together to resolve these outstanding existing trade agreements with APPOINTMENTS een traditional and digital serv- viding separate figures for digi- approach of Accenture, which the RCEP”. issues in a mutually satisfactory way. Malaysia, Japan, Singapore, and ices is growing, leading to some tal versus core revenues from has also stopped reporting dig- This was a nod by the government India’s final decision will depend on South Korea are grossly unfavourable level of cannibalisation,” said third quarter onwards. ital revenue as in every project, to concerns raised by domestic indus- satisfactory resolution of these to India and have led to a widening Sanchit Vir Gogia, chief analyst “Digital is not growing that there is a component of digital try and farmers, most of whom had issues,” the joint statement had said. trade deficit with these nations. and chief executive officer fast, while core is declining now,” Jain said. opposed the pact, fearing it would Negotiations, started in 2012, are India has repeatedly maintained (CEO), Greyhound Research. every year. That is the reason Interacting with analyst, the lead to uncontrolled dumping by currently expected to culminate in a that if other RCEP nations come up Analysis of the third quar- that for most firms, growing at CEO and MD of TCS, Rajesh Go- China. But the RCEP nations had left final deal being signed by end-2020. with better offers, it will be open to ter earnings for this financial double digit has become a chal- pinathan, had echoed this sen- the door open for India — the largest The deal is now being scrubbed for discussion. Currently, India is explor- year pointed out that revenues lenge,” said Pareekh Jain, an IT timent. “It is becoming difficult untapped consumer and industrial legal issues. ing trade agreements with the US and of these companies from tradi- outsourcing advisor and fou- to differentiate between what is market — in the bloc. The RCEP issue had divided the the European Union to allow the tional businesses either decl- nder of Pareekh Consulting. “IT digital and what is existing, and All nations, apart from India, went domestic industry, with various sec- manufacturing and services sectors ined or grew at a slower pace. firms are witnessing cannibali- that boundary has become a ahead with the deal after the conclu- tors like retail, dairy, and electronics to benefit from access to large devel- For instance, Infosys’ core rev- sation of their revenues to an very nebulous boundary. That sion of the summit in Bangkok. vehemently opposing the deal, fear- oped markets. enues declined 5 per cent year- extent, which is visible from the is why, we are discontinuing on-year basis while HCL fact that clients are asking for reporting from this quarter on- Technologies’ mode-I revenues discount during the time of wards,” Gopinathan had said. Central Governmentapproves 100% FDI in Airtel (mostly constituting the core project renewal.” Despite the fall in core rev- segment) grew 0.3 per cent. Experts opined that the line enues, IT firms are recovering The Department of Telecom (DoT) The company also has the of Telecommunications (DoT) vide While the numbers for Wipro between core and digital are get- faster owing to new revenue has approved raising of foreign approval of the Reserve Bank of its letter dated January 20, 2020, were not available, sources said ting blurred and in the absence streams. “The growth of newer direct investment in Bharti Airtel India (RBI) that allowed foreign for increasing the limit of foreign it was on a negative zone. The of any reporting framework, revenue lines has started in a to 100 per cent from 49 per cent investors to hold up to 74 per cent investment up to 100 per cent of market leader, Tata Consu- TCS’ decision not to differenti- significant way. So, it’s not May allowed earlier, a stock exchange stake in the company. the paid-up capital of the compa- ltancy Services (TCS) has dis- ate between the two is logical. Day yet,” said Gogia of Grey- filing of the company said on "Bharti Airtel has received ny,” the continued the practice of pro- “If you see, TCS is taking the hound Research. Tuesday. the approval from the Department filing said. PTI 6 ECONOMY & FINANCE MUMBAI | WEDNESDAY, 22 JANUARY 2020 1 > Credit risks to stay Frost Int’l booked for ~3,592-cr scam PRESS TRUST OF INDIA New Delhi, 22 January ED attaches ~107-cr assets of Kolkata firm The Central Bureau of Investigation (CBI) has booked Mumbai-based Frost International, its PRESS TRUST OF INDIA CBI books ex-DGFT officer, high this year too others in ~20-cr duty fraud directors Uday Desai and Sujay Desai, besides 11 New Delhi, 21 January other individuals and companies for allegedly CBI filed a corruption case against cheating a consortium of 14 banks to the tune of Assets worth over ~107 crore of a a former Directorate General of over ~3,592 crore, officials said. Kolkata-based firm have been Foreign Trade along with directors for India, says S&P The action has been taken on the complaint of attached in connection with a of a private company for allegedly Kanpur Zonal office of Bank of India, which money laundering probe linked to cheating the exchequer of nearly ABHIJIT LELE alleged that the directors had worked in the guise an alleged bank fraud case, the ~20.26 crore through fraudulent Mumbai, 21 January of undertaking merchanting trade without gen- Enforcement Directorate (ED) said claim of terminal excise duty in uine business. on Tuesday. 2014-15, officials said on Tuesday. he credit risks will It is alleged that they had defaulted in meeting The action has been taken They said the action has been remain high in the payment obligation towards the lending banks against directors of Fair Deal taken against A K Singh, the T country’s financial sec- of the consortium, led by Bank of India, the offi- Suppliers, their land and building directors Ram Prasad Agarwal, former DGFT joint director, tor in 2020, despite the recog- cials said. The company and its directors, guar- in Coimbatore, an office building, Narayan Prasad Agarwal, Pawan Ahmedabad and Mohit Kumar nition of legacy stressed assets antors and unidentified others submitted forged a farm house, bungalow in Kumar Agarwal and Saurabh Goel, Ankur Aggarwal and Nand and capital infusion by the documents, diverted and siphoned off the bank's Ahmedabad and seven fixed Jhunjhunwala and others were Kishore Aggarwal — all directors government in public sector funds, they said. deposits have been attached booked by it after studying a CBI of Crystal Crop Protection. The CBI banks, Standard and Poor's The action of the company and its directors under PMLA. The total value of the charge sheet filed against them for had sought sanction from the (S&P) said on Tuesday. cheated the banks to the tune of over ~3,592.48 properties is ~107.73 crore. "defrauding" a UCO Bank flagship commerce ministry before India will go through a tug crore, they added. ED said that the firm and its corporate branch in Kolkata. proceeding against the officer. of war on the economy, reso- lution of bad loans, and health of non-banking financing ILLUSTRATION: BINAY SINHA companies (NBFCs). Private sector banks and top-tier pub- lic sector banks with better Rupee-dollar derivatives to enter Gift City franchises, profitability, and THREE KEY RISKS TO BANKS capitalisation are likely to „Disruption in global „Geopolitical tensions „Commodity RAJESH BHAYANI THE LOWDOWN billion for 2019. In sum, the increase their market share, trade and volatile and domestic policy price Mumbai, 20 January rupee’s offshore market is big- „ RBI has allowed rupee Taiwan and Russia S&P said in reports on banks in capital flows uncertainty volatility ger than the domestic one. 15 emerging markets. Rupee-dollar derivatives are futures and options „ India's share is 18.22% RBI earlier had reservations Reduction in stressed Banks’ asset quality trajectory set to enter stock exchanges settled in foreign of the trade in NDFs on the latest move, due to con- currency assets is contingent upon the „Domestic NPAs „Credit losses (%) established by the BSE and globally cern regarding impact on the insolvency and bankruptcy NSE in the International domestic market. However, that „The daily volume in NDF „ In 2018, $23 bn was in process. India's corporate 11.6 9.3 9.3 Financial Service Centre markets is $200 bn impact also happens when there bankruptcy process has been a 8.8 8.4 (IFSC) at Gift City in offshore rupee trades is huge movement in the interna- mixed bag. The process has Gandhinagar, Gujarat. „ 2/3rd of this volume is „ In 2019, onshore tional (offshore) market. in currencies of Korea, yielded recovery rates that are 3.5 The Reserve Bank of India daily forward volume Exchanges in Gift City higher than the earlier regime 2.7 2.1 (RBI) has permitted rupee- India, China, Brazil, was $21 billion operate 22 hours a day and, and stabilised non-performing 1.5 1.3 derivatives (with settlement in Source: Paper presented by Dipesh Shah, head, GIFT City hence, foreign portfolio loan (NPL) ratios for the sys- foreign currency) to be traded investors would find it efficient tem in the past financial year. 2017 2018 2019 (E) 2020 (F) 2021 (F) in all IFSCs. The consequent get the international investors mitted on recognised stock recommended allowing to hedge their requirement on However, it is taking longer E: estimated; F: Forecast Source: Standard and Poor’s amending of regulations under and non-resident investors to exchanges set up in IFSCs. domestic banks to freely NDFs which can now be in Gift than originally envisaged. the Foreign Exchange engage on this at the IFSC for Contracts in the rupee shall be offer foreign exchange prices City-based exchanges, once Large banks have 30-50 per sions are critical for these PSB’s purchase of high-rat- Management Act has been all their needs including hedg- settled in a currency other to non-residents at all times, RBI clears the rules. cent of their NPLs undergoing banks to tide over the provi- ed pooled assets of ~1 trillion is notified. ing,” said Balasubramaniam. than the rupee and anyone out of their Indian books, RBI restricts participation resolution under bankruptcy sioning hump. Referring to eligible for a one-time six “We will be keen to launch Now a circular with clarifi- residing outside India may either by a domestic sales of resident entities in currency proceedings and a sizable credit drivers, the rating months' partial credit guaran- the rupee-dollar Futures and cation from Sebi is expected undertake these. team or through their for- derivatives on Indian amount of this is scheduled to agency said the Indian econo- tee by the government for the Options contracts on our India with position limits and other The aim is to bring in the eign branches. exchanges to the extent of their be resolved in the FY21. my has cooled off in recent first loss of up to 10 per cent. INX Derivatives platform on a details pertaining to trading. offshore rupee market. As of Currently, cross-currency underlying exposure. A large Stabilisation in asset quality is quarters because of weak pri- The central bank is facilitat- non-delivery basis after An IFSC caters to cus- now, huge rupee trades take trades are permitted on the market, outside the influence contingent upon these resolu- vate consumption and is likely ing these transactions by pro- obtaining necessary regulatory tomers outsider the jurisdic- place in non-deliverable for- International Exchange float- of regulatory authorities, tions. S&P said it expects the to remain soft in FY20. viding banks with a liquidity approvals. Introduction of tion of a domestic economy. wards (NDFs) abroad. In last ed by the BSE and NSE IFSC undermines their effective- Indian government to remain The government's fiscal backstop against their excess rupee-dollar pair will enable Such centres deal with flows October’s policy statement, exchange in Gift City. ness. At Gift IFSC exchanges, supportive of public sector push in the form of corpora- holdings of government secu- India’s own IFSC to bring the of finance, financial products The RBI had said two recom- However, the volume is minus- all products in derivatives are banks, as reflected in its ongo- tion tax cuts, income transfers rities. However, market volatil- offshore market onshore,” said and services across borders. mendations by a task force cule because of the absence of permitted except rupee ing recapitalisation plan. Weak to farmers, and the RBI’s poli- ity developments stemming V Balasubramaniam, MD & The RBI has permitted both chaired by ex-deputy governor rupee exchange trade. exchange rate ones. operating income at several cy rate cuts and transmission from financial firms may have CEO, Indian International rupee exchange rate futures Usha Thorat had been accept- In 2018, the Bank of NDF markets are not a phe- public sector banks will make may lead to some recovery. broader economic effects on Exchange. and options. The notification ed — one of these was to per- England reported $23 billion nomenon peculiar to the them reliant on government “We expect GDP growth of financial conditions and bor- “Already the offshore says currency derivatives in mit rupee exchange rate deriv- in offshore rupee trade. RBI rupee; they are common for capital infusions. 6.5 per cent in FY21 and 7 per rowers, thus affecting bank rupee-dollar market is pretty any currency pair involving atives in exchanges at Gift City. sources estimated deliverable currencies of many emerging Timely and sufficient infu- cent in FY22,” it added. asset quality, S&P added. large and our effort will be to the rupee or otherwise are per- The task force had also daily onshore forwards at $21 market economies. 8 ISSUES AND INSIGHTS MUMBAI | WEDNESDAY, 22 JANUARY 2020 >

> sion of sentence pending are usually couched in blurred CHINESE WHISPERS appeal. SCR was silent after that or inscrutable language, disre- Riding power without bridles for a long time on this power. It garding the dictum that lan- was understood that the power guage of law must be clear and An undefined constitutional clause has grown too big for the times to do “complete justice” was to simple. An ordinary person, for Son-in-law of MP be exercised only in procedural instance, would be nonplussed The elevation of rule without debate in May this power “undefined and structure were transferred from matters. But after the by a passage in the Ayodhya Jagat Prakash 1949. But gradually, the court uncatalogued”. The power is Rae Barely to Lucknow court Emergency of 1975, the law judgment: “Where rigidity is Nadda (pictured) invoked this Article more and vested only in the Supreme when the trial was about to end expanded to cover all injustices considered inadequate to as the new more and it has become an Court and that was assumed to after 25 years. through public interest litiga- address a situation, the plenary Bharatiya Janata immense source of judicial be a guarantee that it will be In the contentious issue of tion. This Article was increas- power of this court for doing Party (BJP) chief authority. It was used in the used only with “restraint and NRC in Assam, orders were ingly used to chase corrupt complete justice is an appeal of brought a lot of recent Ayodhya judgment, circumspection”. The judges, passed in the same manner in politicians (Vineet Narain last resort to the inherent qual- joy to Madhya orders in the National Register however, have cautioned that two parallel public interest judgement, 1997), judges ( K ity of equity that the law is Pradesh — of Citizens, coal mine cases, this provision, which is not petitions. The matter is now in Veeraswami,1991), to settle designed to protect, to ensure especially to the city of Jabalpur. That’s constitutional appointments found in any revered democrat- suspended animation before claims in the Union Carbide that the court is empowered to because Nadda's wife Mallika, a and ban on liquor shops on ic constitutions, should be used the court in view of the protests case (1989), examine the craft a relief that comports with professor of history at the Himachal highways, to name a few. sparingly. But the current trend in the streets. Emigration Act (1979) and to both reason and justice.” In the Pradesh University, hails from that city. OUT OF COURT The term complete justice is to invoke it in high profile cas- In the coal block allotment device rules to tackle sexual present volatile situation in Many of the family's neighbours were consists of two words which are es fraught with political and scam, this extraordinary power harassment at workplace multi-religious polity and law, seen distributing sweets. Nadda's MJ ANTONY elastic at the hands of judges, economic consequences. The was exercised with disastrous (Vishaka, 1997). Often the it is important to follow trans- mother-in-law Jayshree Banerjee has who interpret it in different con- sword of "complete justice", held consequences. Allocations grant- decrees are forgotten soon after parent and strict guidelines on represented the town both in the MP texts. Several judgments have by unelected judges, hangs over ed from 1993 were cancelled in they are passed, like the guide- the use of Article 142. A torrent Assembly as well as in Parliament. ew provisions in the tried to explain the phrase, but sensitive cases and could strike 2004 without hearing the allot- lines on the implementation of of words, as lawyers know, Madhya Pradesh Chief Minister Kamal Constitution have grown it still remains fuzzy. Some deci- at any time. tees. The relentless march of this the Dowry Prohibition Act. hides a weak stance. Nath congratulated Nadda addressing F from apparent insignifi- sions assert that it could be used In the Ayodhya judgment, rule has caused anxiety in the How many would remember, Commenting on the trend him as the son-in-law of the state. cance to acquire formidable to fill a vacuum when the two crucial orders were based on field of environment. for instance, the fiat that hos- some time ago, the present “Many congratulations to the state’s power as Article 142. It grants statutes are silent. Some others this Article -- the grant of five The official Supreme Court pitals which import equipment Attorney General K K son-in-law JP Nadda-ji for being power to the Supreme Court to maintain that the power is sup- acres to build a mosque and the Reports (SCR) recorded the use with customs concessions must Venugopal quoted US Justice elected the national president of BJP,” pass any decree to do “complete plementary, complementary representation of Nirmohi of Article 142 for the first time publish the names of the poor Benjamin Cardozo, who said Nath tweeted. justice”. The founding fathers and affirmative. In one judg- Akhara in the proposed scheme. in the Nanavati case (1961) in persons it has treated every that a judge “is not a knight- did not expect this enormous ment, the Supreme Court Earlier, the criminal cases which a naval officer convicted month? errant roaming at will in pur- transformation and passed the declared it is advisable to leave involving the demolition of the of murder was granted suspen- Discussions on Article 142 suit of his own ideal...” In-house criticism The UN climate summits or the COP (Conference of the Parties) might be doing all it can to demonstrate to the world what can be achieved through a consistent policy of sustainable development and economic A natural growth story in artificial diamonds transformation, but at home some members are facing stiff criticism. LGDs are becoming the rage in China and the ROCK OF THE Britain's Claire O'Neill, COP26 president, is one of them. "My West; but the trend eludes India FUTURE daughter is an Extinction Rebellion protestor. She tells me you are just not RAJESH BHAYANI the year before. Ziminisky excludes 4% Current market doing enough. And all I can say is I am diamonds below 0.5 carat but, accord- share of LGDS doing whatever I can," she described or some decades, De Beers, the ing to Bain and Co, it is on this sub- with a mother's angst during a round world’s largest diamond miner, one carat category that producers are 15% 2030 market share table held in Delhi recently. Fhas been focusing on a product now focusing. that essentially competes with its core What’s driving this growth is falling 15% India’s share of business: synthetic or lab-grown dia- prices. Zimnisky said LGDs are selling global LDG exports monds (LGDs). Initially, the UK-head- 45 to 55 per cent less than the price of quartered major produced LGDs for equivalent natural diamonds, down industrial purposes through a sub- from a 35 to 45 per cent discount a year $800 or ~56,800 sidiary called Element Six. Then in ago. According to De Beers’ research, Cost per carat of LGD 2018, it set up Lightbox Jewelry, a fash- consumers view LGDs as a product ion jewellery business built on LGDs. category distinct from natural dia- ~4 lakh a carat: Cost per This retail line from the conglom- monds. “Following the launch of carat of natural diamond erate that controls a third of Lightbox Jewelry, whole- the world’s natural diamond sale prices for LGDs Indian jewellery processors business is the strongest sig- decreased by around 60 mostly focussed on natural Conspiracy theory nal yet of a growing market per cent within a six- diamond When Aam Aadmi Party (AAP) chief that offers India major oppor- month period. Retail Sources: Bain & Co; Industry and Delhi Chief Minister Arvind tunities for exports and cre- prices have also seen Kejriwal (pictured) reached the office ating a domestic market. consistent declines, hav- the poor LGD market in India. As the ond largest LGD producer, and in the also prefer to deal in import of rough of the returning officer to file his Being lab-created, LGDs are ing fallen by around 20- Global Diamond Industry Report (pre- April- December 2019 period, India’s LGDs from China and export polished nomination papers on Tuesday, he considerably cheaper than TAKE 30 per cent since the pared by Bain and Antwerp World polished LGD exports doubled to ones to the US, the largest market for found a long queue of people waiting natural diamonds — they cost start of 2019,” a company Diamond Center) pointed out, $312.06 million, according to the Gems India’s polished diamonds. In India, to file theirs. The AAP alleged it was a about $800 or ~56,800 a carat TWO spokesman said. This “Acceptance of lab grown diamonds in and Jewellery Export Promotion however, many of these players prefer conspiracy. "Small room packed with compared with ~4 lakh a carat ANALYSIS BEHIND trend is consistent with India is negligible as people seek spir- Council (GJEPC). Exports of natural to remain low profile because they 40-plus candidates who want to file for a benchmark variety of THE HEADLINES prices for laboratory- itual meaning in the natural gem- polished diamond exports, by con- have been trading or dealing with nat- nomination. Each nomination takes polished diamonds (they grown ruby, sapphires stones.” This apart, rich consumers in trast, have been down 17.89 per cent to ural diamonds, which has been 30-45 minutes. These 40-plus should not be confused with and other precious India prefer the uniqueness of natural $14.67 bn in the same period. through a rough patch recently. candidates know each other well. Cubic Zirconia, which is a cheaper stones, which retail at 10 per cent the diamonds. According to GJEPC vice chairman De Beers’ Lightbox Jewelry is Yesterday, the CM was supposed to file variety of stone). price of the natural stone. Adds Rajiv Popley, director, Popley Colin Shah, “With the help of new expected to change the rules of the his nomination, so 53 candidates With global natural diamond sup- This trend has, however, eluded Group, which has jewellery stores in technology for lab grown diamonds game. Element Six is currently con- came to file, but most of them did not plies predicted to start declining from India, one of the world’s largest India and in Dubai, “Indian con- manufacturing, LGDs are expected to structing a new LGD production facil- as the CM did not," tweeted AAP this year (unless new mines are found), exporters of polished natural dia- sumers have always valued higher redefine the global gem and jewellery ity in Gresham, Oregon to produce legislator Saurabh Bharadwaj. The LGDs are gaining ground as a useful monds and gems. India accounts for quality jewellery. Through mythology industry. Newly developed categories stones for Lightbox; this facility will party alleged a group of 50 was taking disruptive technology. They account 15 per cent of global LGDs, mainly in & history, premium gemstones of LGD are characterised with the ramp up to full production over the tokens to file their papers for for just 4 per cent of natural diamond polished form, and exports virtually and high quality diamonds have same properties of natural diamond course of the next year and will have Kejriwal's constituency, New Delhi, market right now, but are projected to all it produces. In contrast China, always been iconic to the Indian com- but with a difference of cost, time and the capacity to produce around every day, for the last four days but grow to around 15 per cent by 2030. which produces about 40 per cent munity.” has positive ecological impact because 200,000 – 250,000 polished carats of were not filing nominations. "They Paul Zimnisky, a New York-based of LGDs, mainly in the form of Even if the domestic market they don’t have to be mined.” LGDs annually. Prices are expected to just wanted to harass Kejriwal,” independent diamond analyst and roughs, accounts for 10 per cent of doesn’t acquire critical mass, the LGD In India, the traditional jewellery fall further when this line comes to Bharadwaj said, tweeting a consultant, estimates that LGD pro- global demand, the largest after the market offers India’s languishing gems processing centres of Mumbai and market, suggesting an opportunity for photograph of Kejriwal seated in the duction has grown 35 per cent in 2019 United States. and jewellery business a sparkling new Surat are centres for LGDs (the latter jewellers to create a vibrant new mar- office for six hours. (about 4-5 million rough carats), over Cultural factors chiefly account for opportunity. India is the world’s sec- mainly for polishing). Many traders ket in India.

INSIGHT > LETTERS

reveal the missing link in deciphering Capital, DHFL, DHIL to have gone Neither affordable nor relevant Missing link the denouement of RCEP saga. that way. Many of them have diverted Durgesh Pawar Pune bank funds to either group companies Is it time to review the need to maintain CRR funds with the central bank? or related ones. Some of them have The bottom line lent for infrastructure without carry- and Sweden — where the legal reserve OECD nations. ing out due diligence and with disre- requirement is zero. Clearly the money India’s reduced dependence on CRR This refers to the well written letter gard to their asset-liability structures. multiplier does not become infinite! may not be coincidental. India’s overall by the veteran RBI-ite Shri R C Mody One of the reasons for the downturn Jaromir Benes and Michael Kumhof macro-prudential strategy is closer to the ("History repeats itself", January 20). in the Indian economy is problems in of the IMF state that the logic of RR OECD playbook. The country has adopt- As an officer who was engaged in the the NBFC/HFC sector. The bad news enabling high-powered money (M1) to get ed inflation targeting and its stated fiscal there doesn’t seem to end. Since multiplied by bank lending is contrary to deficit target is based on a target debt-to- banks have lent to these institutions the operational mechanism of credit and GDP ratio of 60 per cent (NK Singh com- it impacts them as well. money creation. The same researchers mittee). The same debt-GDP ratio is This is an appropriate time for the find that central banks oblige whenever required for European countries as per supervisory authorities to conduct DEEP NARAYAN banks require money to compensate for the Maastricht Treaty, an eligibility crite- This refers to “Leaving RCEP: A asset quality reviews (AQR) of the depleted reserves. Thus the argument ria for Eurozone membership. You can missed opportunity?” (January 17). large NBFCs/HFCs which are facing that banks need to keep cash in vaults or have too much of a good thing and that is The article rightfully emphasises the problems to know the real quality of with the central bank is less tenable than equally applicable to macro-prudential role of trade in realising the untapped the assets they hold. The advantage ndia’s banking regulator has the popularly believed. With the two popular norms. The existence of CRR and that too potential of a country. At present of this is not only greater transparen- unenviable task of nursing the bank- reasons for CRR either theoretically at current levels looks out of misplaced. India has bilateral trade agreements cy, but also that timely steps can be Iing sector back to health as well as untenable or practically irrelevant, one After hovering at peak rates of 14.5-15 with Japan, Malaysia, Singapore, inspection of commercial banks taken to ameliorate the situation. By address macro growth challenges. On the might ask why India persists with CRR per cent between 1988 and 1994 the tra- Thailand and South Korea as well as across the country for over 20 years, I not doing AQRs we will continue to one hand, the country's banks, particu- and that too at the current levels. jectory of our CRR has been largely falling an FTA with members of ASEAN. can say that if generalists could man- be surprised seeing some of the big larly PSU banks, are struggling with Is CRR useful? CRR along with open in line with most of the world. During that Thus, in ratifying the RCEP, the bar- age the Reserve Bank of India, there ones fall. The problems of these insti- reduced profit and eroding capital, on the market operations (OMO) and standing period quite a few countries reduced RR riers would have been lowered with would be no need for a separate tutions won’t go away immediately, other, the RBI’s is trying to revive credit facilities are a central bank’s tools to oper- to zero, while a number of OECD and oth- only China, Australia and New organisation; it could have been a but timely proactive steps will growth by reducing the interest rate and ationalise monetary policy. CRR is a quick er industrial nations have got them at lev- Zealand. Therefore, this dilutes the department of the Union Ministry of limit the damage they cause to finan- enhancing liquidity. A wide range of deci- way to adjust the demand for liquidity els of 1.5-2 per cent. spillover effects of intensive and Finance. cial system. sions have been taken to address the while the other two tend to impact the If deployed as interest earning asset, extensive margin arising from trade C V Subbaraman Arun Pasricha New Delhi issues facing industry. While the efforts supply of liquidity (O’Brian, Federal the current CRR an interest income to the as stated in the article. Further, an former Regional Director, RBI continue it is somewhat surprising that Reserve Board, Washington). In the past, tune of Rs40,000 crore or more. To put examination of India’s current trade not much action was seen on the cash developing countries have used RR in things in perspective, PSU banks’ cumu- agreements doesn’t enthuse much Limit the damage reserve ratio (CRR) front. Indian banks conjunction with domestic interest rate lative annual PBT for FY19 is estimated confidence. For instance, between Letters can be mailed, faxed or e-mailed to: The Editor, Business Standard currently maintain an estimated ~5.25 tril- as a macro prudential tool. at Rs 1.15 trillion. Two-thirds of the CRR 2014-15 and 2018-19 India’s trade This refer to "What next, Reliance Nehru House, 4 Bahadur Shah Zafar Marg lion with the RBI, without any income Between 1970 and 2011, India was one can safely be attributed to PSU banks. deficit with the ASEAN increased Home Finance?" (January 20). If New Delhi 110 002 from the same. However, they incur a of the most active users of CRR as a mon- Any support coming via redeployment of from $13bn to $22bn. This story Reliance Home Finance goes bust it Fax: (011) 23720201 · E-mail: [email protected] deposit cost of about ~25,000 crore annu- etary stabilisation tool (Frederico, Vegh, CRR will have a meaningful impact on rhymes when one looks at the trade will be in a long line of NBFCs/HFCs, All letters must have a postal address and telephone ally. Rethinking CRR might help address Vuletin; 2014). This was a classic devel- PSU profitability. Not to mention the fact deficit with other members of the namely, IL&FS, Altico, Reliance number some of the challenges the RBI is trying oping market behaviour. In that context, that it would unleash ~5.25 trillion worth RCEP, like Japan and South Korea. to address. the fact that the CRR rate has remained of liquidity into the market. There is no denying that trade > HAMBONE Textbooks continue to tout the mon- at 4 per cent since February 2013 suggests A conservative and calibrated reduc- based on comparative advantage ben- ey-multiplier (MM) argument for CRR (or a significant divergence from the pre-2011 tion of CRR to a level of 1.5 per cent over efits countries, so an apposite analy- reserve requirement in a global context). behaviour. Of course, the RBI did increase the next couple of years is a viable option. sis could have been based on the rea- However, the credibility of the money the incremental CRR to 100 per cent dur- In any case there should be a debate on sons for India remaining multiplier argument based on the frac- ing the demonetisation period, but it was whether India needs a CRR in the first non-commital even after seven years tional reserve banking (FRB) construct used as a temporary measure. place. Burdening banks with CRR may not of negotiations. An analysis of the has waned over the years. The whole Not using the CRR as a macro-pruden- be in the best interest of the economy. unresolved issues, such as rules of ori- hypothesis was weak to start with. There tial tool is a significant evolution in India’s gin, auto trigger and safeguard mech- are at least six countries — Australia, behaviour. Stable, infrequently altered The writer is a visiting faculty of Finance at IIM anism for surge in imports and rules Canada, Denmark, New Zealand, Norway, reserve requirements, is a feature of Calcutta & a risk consultant governing e-commerce, transfer of information and server locations, can OPINION 9 > STAY INFORMED THROUGH THE DAY @ WWW.BUSINESS-STANDARD.COM

Volume XXIV Number 114 ILLUSTRATION: BINAY SINHA The tax cuts were supposed to spur a new wave of MUMBAI | WEDNESDAY, 22 JANUARY 2020 investment. Instead, they triggered an all-time record binge of share buybacks — some $800 billion in 2018 — by some of America’s most profitable companies, and led to record peacetime deficits (almost $1 trillion in fiscal 2019) in a country supposedly near full employ- The other population problem ment. And even with weak investment, the US had to Many parts of India are already ageing borrow massively abroad: The most recent data show foreign borrowing at nearly $500 billion a year, with or years, one of the major problems facing the world and India was an increase of more than 10 per cent in America’s net an exponential growth in population. But, in recent years, that problem indebtedness position in one year alone. Likewise, Trump’s trade wars, for all their sound might have reversed. The United Nations estimates that 27 countries and fury, have not reduced the US trade deficit, which F have fewer people now than in 2010, and 55 will have their populations was one-quarter higher in 2018 than it was in 2016. decline in the decades to 2050, which means falling populations will become The 2018 goods deficit was the largest on record. Even normal. This brings with it a series of worrying geo-economic consequences. the deficit in trade with China was up almost a quarter For example, some economists who see economic growth per capita arising from 2016. The US did get a new North American trade agreement, without the investment agreement pro- from productivity increases, which in turn are driven by innovation, worry The truth about the visions that the Business Roundtable wanted, without that a smaller population might produce fewer innovations — thus, eventually the provisions raising drug prices that the pharma- leading income per capita to stagnate even as the population falls. Others are ceutical companies wanted, and with better labour concerned that expectations of a falling population mean that producers’ expec- and environmental provisions. Trump, a self-pro- tations of future demand are similarly lowered, leading to a crisis of aggregate Trump economy claimed master deal maker, lost on almost every front demand and investment. Yet some others point out that these very effects in his negotiations with congressional Democrats, resulting in a slightly improved trade arrangement. could lead to a further decline in fertility, as parents feel the need to invest in It is becoming conventional wisdom that Trump has been good And despite Trump’s vaunted promises to bring fewer children given their dimmer prospects. for the economy. Nothing could be further from the truth manufacturing jobs back to the US, the increase in Population stagnation, once associated only with the rich economies, is manufacturing employment is still lower than it was now also seen in middle-income countries — and in those states of India that s the world’s business elites trek to Davos for stood at almost four times their 1999 level. under his predecessor, Barack Obama, once the post- are also at the upper-middle income level. The Economic Survey of 2019 had an their annual gathering, people should be asking The only time I have seen anything like these 2008 recovery set in, and is still markedly below its entire chapter on Indian demographics that will likely become a standard ref- Aa simple question: Have they overcome their declines in health — outside of war or epidemics — pre-crisis level. Even the unemployment rate, at a 50- infatuation with US President Donald Trump? was when I was chief economist of the World Bank year low, masks economic fragility. The employment erence in the years to come. It projects total Indian population growth in the Two years ago, a few rare corporate leaders were and found out that mortality and morbidity data con- rate for working-age males and females, while rising, two decades between 2020 and 2041 as being just over 12 per cent. But this con- concerned about climate change, or upset at Trump’s firmed what our economic indicators suggested about has increased less than during the Obama recovery, ceals great variation in population growth and fertility across regions and states. misogyny and bigotry. Most, however, were celebrat- the dismal state of the post-Soviet Russian economy. and is still significantly below that of other developed Some states, such as Bihar, will grow by 25 per cent — in other words, at histor- ing the president’s tax cuts for billionaires and cor- Trump may be a good president for the top 1 per countries. The pace of job creation is also markedly ically comparable levels. Others, such as Andhra Pradesh (AP), will barely see porations and looking forward to his efforts to dereg- cent — and especially for the top 0.1 per cent — but he slower than it was under Obama. any population increase — the Economic Survey suggests that AP will have its ulate the economy. That would allow businesses to has not been good for everyone else. If fully imple- Again, the low employment rate is not a surprise, pollute the air more, get more Americans hooked on mented, the 2017 tax cut will result in tax increases for not least because unhealthy people can’t work. population grow by only 3.4 per cent between 2021 and 2041. By the fourth opioids, entice more children to eat their diabetes- most households in the second, third, and fourth Moreover, those on disability benefits, in prison — the decade of this century, the Survey suggests that the population of Tamil Nadu inducing foods, and engage in the sort income quintiles. US incarceration rate has increased more than sixfold will actually be shrinking. The implications of a changing age distribution will of financial shenanigans that brought Given tax cuts that dispropor- since 1970, with some two million people currently begin to be felt even sooner. By 2031, the size of the working-age population on the 2008 crisis. tionately benefit the ultrarich and behind bars — or so discouraged that they are not will start to decline in 11 states. In other words, Indian policy-makers should be Today, many corporate bosses are corporations, it should come as no actively seeking jobs are not counted as “unemployed.” preparing for a situation in which large parts of the country will suffer the “rich still talking about the continued GDP surprise that there was no significant But, of course, they are not employed. Nor is it a sur- growth and record stock prices. But nei- change in the median US house- prise that a country that doesn’t provide affordable economy” problem of stagnant or declining populations. ther GDP nor the Dow is a good mea- hold’s disposable income between childcare or guarantee family leave would have lower Kerala, which has impressive human development indicators, saw annual sure of economic performance. Neither 2017 and 2018 (again, the most female employment — adjusted for population, more population growth of only 0.5 per cent between 2001 and 2011. There is much tells us what’s happening to ordinary recent year with good data). The than 10 percentage points lower — than other devel- to be learned from those areas of the country that are dealing with the peaking citizens’ living standards or anything lion’s share of the increase in GDP oped countries. of school-age population. The effects are already being seen on the school about sustainability. In fact, US eco- is also going to those at the top. Real Even judging by GDP, the Trump economy falls infrastructure. The Survey reported that the number of elementary schools nomic performance over the past four JOSEPH E STIGLITZ median weekly earnings are just 2.6 short. Last quarter’s growth was just 2.1 per cent, far years is in the indictment against rely- per cent above their level when less than the 4 per cent, 5 per cent, or even 6 per cent with under 50 students has increased in the 2010s for every state in the country, ing on these indicators. Trump took office. And these Trump promised to deliver, and even less than the 2.4 with the sole exception of Delhi. Health infrastructure will also have to be To get a good reading on a country’s economic increases have not offset long periods of wage stagna- per cent average of Obama’s second term. That is a upgraded to deal with more older patients. With fewer students and a large health, start by looking at the health of its citizens. If tion. For example, the median wage of a full-time male remarkably poor performance considering the stim- number of older people to support, the level of human capital imparted to each they are happy and prosperous, they will be healthy worker (and those with full-time jobs are the lucky ulus provided by the $1 trillion deficit and ultra-low member of the workforce becomes vital. The macro-economic effects must and live longer. Among developed countries, America ones) is still more than 3 per cent below what it was 40 interest rates. This is not an accident, or just a matter also be kept in mind. India can no longer hope to depend on the growth impetus sits at the bottom in this regard. US life expectancy, years ago. Nor has there been much progress on reduc- of bad luck: Trump’s brand is uncertainty, volatility, already relatively low, fell in each of the first two years ing racial disparities: In the third quarter of 2019, median and prevarication, whereas trust, stability, and confi- that came from an increasing proportion of the workforce — unless that is aug- of Trump’s presidency, and in 2017, midlife mortality weekly earnings for black men working full-time were dence are essential for growth. So is equality, according mented in other ways. Getting more women into the workforce is the only way reached its highest rate since World War II. This is not less than three-quarters the level for white men. to the International Monetary Fund. to counteract this phenomenon. a surprise, because no president has worked harder Making matters worse, the growth that has So, Trump deserves failing grades not just on to make sure that more Americans lack health insur- occurred is not environmentally sustainable — and essential tasks like upholding democracy and pre- ance. Millions have lost their coverage, and the unin- even less so thanks to the Trump administration’s gut- serving our planet. He should not get a pass on the sured rate has risen, in just two years, from 10.9 per ting of regulations that have passed stringent cost- economy, either. Simplifying tax on capital cent to 13.7 per cent. benefit analyses. The air will be less breathable, the One reason for declining life expectancy in America water less drinkable, and the planet more subject to The writer , a Nobel laureate in economics, is University A clear timeline needed for transition to a transparent regime is what Anne Case and Nobel laureate economist climate change. In fact, losses related to climate change Professor at Columbia University and Chief Economist at Angus Deaton call deaths of despair, caused by alcohol, have already reached new highs in the US, which has the Roosevelt Institute. His most recent book is People, he government is reportedly considering abolishing the dividend drug overdoses, and suicide. In 2017 (the most recent suffered more property damage than any other country Power, and Profits: Progressive Capitalism for an Age of distribution tax (DDT) and making dividend income taxable in the year for which good data are available), such deaths — reaching some 1.5 per cent of GDP in 2017. Discontent. ©Project Syndicate, 2020 hands of shareholders. The move is expected to boost investor sen- T timent as it will reduce multiplicity of taxes for companies. DDT is currently levied at a rate of 20.55 per cent, including surcharge and education cess, on dividends paid by companies to shareholders. The government has reasons for reconsidering the DDT. Finance Minister Nirmala Sitharaman had Revival lessons from 2008 stimulus termed the tax a “regressive measure” in the last session of Parliament because it leads to cascading of taxes. It affects foreign investors who are unable to hen the global financial crisis occurred in announced the lowering of the repo rate by 100 basis Commission and taking approval where needed. claim credit in their home country since they don’t pay DDT directly. The September 2008, India’s growth rate over the points at one go. From September 2008, it progressively A higher fiscal deficit as a result of the stimulus removal of DDT would also benefit domestic investors who are in a lower tax Wprevious years had been averaging 8.9 per lowered the repo rate from 9 per cent to 5.5 per cent was envisaged. But this was to be for the short-term. bracket. Another big reason for reconsidering DDT could be that it was initially cent. There was initially a sense of complacency that and the cash reserve ratio from 9 per cent to 5 per cent. In 2007-08, the fiscal deficit was only 2.6 per cent of India would remain untouched as it had been cautious It made available about ~4 trillion of additional liquidity GDP. In 2008-09, it rose sharply to 6.1 per cent. By the imposed to increase the ease of collection. However, most transactions in this and had not deregulated its financial system. There through various measures. Liquidity ceased to be an end of 2009-10, with growth having returned to earlier category are now done electronically, so it’s no longer difficult for the tax depart- was no exposure to the high-risk financial products issue in the financial system. levels, fiscal deficit reduction to the pre stimulus levels ment to track the flow. The removal of the tax was also suggested by the Akhilesh that caused the crisis in the US. So, the precipitous fall On the fiscal side, excise duty was lowered by 4 should have become a priority. This did not happen. Ranjan panel, which reviewed direct tax laws. that occurred in the Indian economy came as a shock. percentage points across the board. The intention In 2011-12, it needlessly rose to 5.9 per cent from 4.9 The government, however, would do well to take a holistic view of the tax- India’s integration with the global financial system was to increase demand with attendant multiplier per cent in 2010-11. Political economy makes increas- ation structure, as frequent changes in the tax system result in instability and had, in reality, become far greater than was assumed. benefits. The pay commission recommendations ing the fiscal deficit easy but reducing it difficult. By November, there was a crisis. The government acted had been implemented and there was greater pur- The present situation is qualitatively different and increase complications for taxpayers. For example, the government imposed swiftly and announced a major stimulus package as chasing power with government servants who had far more challenging. The persisting downturn is tax on share buybacks in the current financial year to remove the arbitrage early as December 6, 2008, followed by two supple- also received arrears. This helped in increasing con- resulting in lower revenues and rising deficit, reducing between dividends and buybacks. Companies were returning surplus cash to mentary packages. These worked sumption. The inclination to increase the space for a fiscal stimulus. The financial sector’s shareholders through buybacks to avoid DDT. But the imposition of tax has more speedily than expected by investment in infrastructure was return to health is still a work in progress. With hind- significantly reduced buybacks. The bulk of the buybacks that happened in most observers. Recovery began avoided. It was recognised that large sight, a rescue of the Infrastructure Leasing & Financial the current fiscal year were announced before the July 2019 Budget. It’s intriguing — from the low of around 5.5 per projects have a long lead time from Services Limited, along with takeover of its manage- cent growth rate in the last two approval, to putting together land, ment, may have been a better option as it would have that the government in July wanted to remove the arbitrage between dividend quarters of 2008-09— in the first inviting bids and then awarding con- avoided the crisis in the non-banking finance compa- and buybacks but is now considering abolishing DDT. This reflects incoherence quarter of 2009-10 itself. The tracts. Actual expenditure could occur nies. There was the successful precedent of the bailout and a lack of objectivity in policymaking. If DDT is removed, companies will financial year ended with gross only after a year. Given the scale of of UTI. A more vigorous resolution of coal and related start returning surplus cash to shareholders through dividend distribution and domestic product (GDP) again the crisis, additional expenditure problems of stalled private sector power projects would avoid buybacks. growing at 8.6 per cent. needed to take place immediately to have eased the burden on the banks. The flow of addi- What is needed at this stage is simplification of the capital gains tax regime. The revival package was put create more demand for domestic tional financing for completing stalled housing pro- together with the correct assess- AJAY SHANKAR goods and services. An increase in jects could have been done earlier. The inability to get For instance, the definition of long-term varies not only for various asset classes ment that the economy was in a plan expenditure of ~20,000 crore for manufacturing going in electronics, IT hardware and but also for assets in the same category. Long-term for listed shares is one year, free-fall due to external shock of the year was provided. Ongoing pro- solar power has led to booming demand being met but for unlisted share it’s two years. They are also taxed differently. Definition of the global financial crisis, and that it needed immedi- grammes, which could absorb additional expendi- by imports. Further, the 19 per cent real exchange rate short-term and long-term is also different for listed and unlisted debentures. ate and strong stimulus measures to arrest the down- ture immediately were identified. Out-of-the-box appreciation by itself would have been enough to Things get more complicated in the case of housing property with several exemp- turn and revive growth. The components of the pack- thinking led to unorthodox measures. To illustrate, cause stagnation followed by a downturn. tions and restrictions. Clearly, there is an urgent need to bring simplicity and age were chosen after close consultations with grants were given for the purchase of buses under However, the major learnings from the 2008-09 representatives from the major sectors of the economy. the Jawaharlal Nehru National Urban Renewal stimulus do have some relevance for the present. The uniformity in the tax structure. It is likely that the direct tax panel would have It was a combination of monetary easing and fiscal Mission for augmenting city bus services. Interest foremost is taking a holistic view and implementing a recommended changes in this area. The government should release the report, measures. The Reserve Bank of India (RBI) worked in subvention of 2 per cent was provided for exports. set of measures having a critical mass so as to increase as it will enable an informed discussion and help policy-makers make the right close coordination with the government. The Small scale enterprises and the housing sector the likelihood of making an early impact. The efficacy intervention. The overhaul of the tax system should be done after proper con- International Monetary Fund (IMF), normally a received some special dispensation. Since the code of the means to achieve a desired outcome has to be sultation to avoid recurring changes. A simple and stable tax system, apart from preacher of lowering fiscal deficits, sent representatives of conduct for general elections was going to come carefully thought through. It is also important to assess improving compliance, will help both firms and individuals to plan their economic across the world advocating the use of fiscal measures into effect by March 2009, measures were identified the time needed for an intervention to deliver results. for generating demand to arrest the downturn. to ensure they did not violate the code of conduct. There are no standard fixes.There should be willing- lives better. It is high time that the government avoided further flip-flop and Normally, the RBI changes interest rates by 25 basis Additional expenditure was made on ongoing pro- ness to consider unprecedented steps and take risks. provided a clear timeline for transition to a new transparent regime. points at a time. Recognising the need for a strong grammes without any publicity. This required work- stimulus, it departed from standard practice and ing in close coordination with the Election The writer is a former secretary, DPIIT

administering land revenue. Crawford, in governor of Bombay. He summoned his effect, had the power to make or break any investigative officers to probe rumours of The British extortionist who built Bombay of the 76 such officials who reported to Crawford’s extortion network. The him. Crawford is alleged to have used this challenge was to get people who had paid Bombay, Arthur Crawford, could well pro- country — till its moniker was changed As the Commissioner of the central extreme power over his subordinates to Crawford to speak up against him. vide insights into that. Former US ambas- post-independence to be named after division of Bombay Presidency, Crawford extract bribes by threatening them with Investigators also had to piece together sador Michael D. Metelits’ book The Maharashtrian reformer Jyotiba Phule. was notorious for transfers to documents, eyewitnesses and Arthur Crawford Scandal: Corruption, Such is Crawford’s legacy that some extracting bribes THE ARTHUR CRAWFORD inhospitable corroborating witnesses to testify against Governance and Indian Victims meticu- people in the city still seek directions for from junior SCANDAL: Corruption, places, stopping Crawford so that he could be prosecuted lously details what happens when those “Crawford market” instead of “Jyotiba ranking officials Governance And their promotions for bribery under the Indian Penal Code, BOOK REVIEW in power are entrusted to punish one of Phule market” . (called Indian Victims and 1860. The surest way to do that was to get their own for corruption and how their Mr Metelits’ book is a comprehensive mamlatdars ) to Author: Micheal D. procrastinating the same Indian officials who had been SAI MANISH biases leads to collateral damage to those account of all that was wrong with the fund his Metelits on their forced to bribing to protect their jobs to who dared to stand up against the mis- executive and judiciary in the British era extravagant Publisher:Oxford appointment. testify against Crawford. As Mr Metelits n July 2018, Parliament passed the deeds of the powerful. — which will remind readers of India as it lifestyle and save As a man in notes this would be fraught with dangers Prevention of Corruption Act that, The book is about the infamous stands in 2020. It is a punctilious for his post- University Press high public office, for the Indian officials. In effect, the trial Iamong other things punished the bribe Arthur Crawford corruption scandal that examination of the trial against Crawford retirement kitty. Price: ~1,295 Crawford made of Arthur Crawford became a test case of giver with incarceration of up to seven resonated both in India and Britain in the and his Indian acolyte Hanmantrao, how Crawford, as the Pages: 243 sure that any what in the modern world would become years. This provision was hailed as a step late 19th century. Crawford was the man Hanmantrao was convicted even as commissioner, money trail could the whistle-blower’s predicament. These towards curbing corruption in a country credited with changing the face of urban Crawford escaped the noose and how had the power to not be traced to days, many nations in the world have laws notorious for it. So what can possibly go Bombay as its first municipal those Indian officials who testified appoint, promote, transfer and retain him. All bribes were collected by to protect whistle-blowers, which were wrong when you go after the bribe givers commissioner by improving the city’s against Hanmantrao and Crawford these mamlatdars, who in turn had Hanmantrao, who would then discreetly non-existent in colonial times. The and treat them on a par with the bribe tak- infrastructure. He had a market named became the biggest victims of the scandal limited magisterial powers in their hand them over to Crawford. As rumours author notes, “It simply did not pay to be a ers? A scandal in British India involving after him in the city — officially the first perpetrated by none other than Crawford respective administrative divisions or of Crawford’s corruption grew, it caught whistleblower and there was no such the first municipal commissioner of building to be lit up with electricity in the himself. talukas and were primarily tasked with the attention of the Lord Reay, then thing as a sting operation.” QUICK TAKE: STRONG RESULTS PROPEL CAN FIN HOMES “Just like the corporate tax cut, LTCG, DDT and personal income tax cuts will benefit Shares of Can Fin Homes jumped 19 per cent on The Smart only the large 50-60 dominant players. Tuesday, on the back of robust results. Net For the mid & small caps, mostly in interest income grew 23 per cent year-on-year the industrial space, we need 6% MUMBAI | to ~168 crore in the December quarter, while GDP and 8% industrial growth.'' WEDNESDAY, 22 JANUARY 2020 profit before tax rose 20 per cent to ~145 crore, beating the Street’s estimate of ~136 crore BASANT MAHESHWARI, Investor Portfolio manager WWW.SMARTINVESTOR.IN FOR INFORMED DECISION MAKING < Volfefe effect: Global Regulator scraps upfront fee for portfolio management services derivative volumes ASHLEY COUTINHO “The portfolio manager shall Mumbai, 21 January NEW NORMS not deploy the clients’ funds in | Minimum investment bill discounting, badla financing The Securities and Exchange amount to be taken from or for the purpose of lending or Board of India (Sebi) notified its clients doubled to ~50 lakh placement with corporate or hit a record in 2019 norms for portfolio managers on | Managers told to raise net non-corporate bodies,” the noti- Tuesday, doubling the minimum worth to ~5 crore within fication said. investment amount to be taken Discretionary portfolio man- three years of notification SAMIE MODAK from clients to ~50 lakh and asking agers have been barred from Mumbai, 21 January such managers to raise their net | PMS fee structures typically investing in unlisted securities. worth to ~5 crore within three years include set-up or upfront fee Those offering non-discretionary he combined futures and of notification. of 2-2.5 per cent, to be paid or advisory services, on the other options (F&O) volume on all NUMERO Under portfolio management in the first year hand, can invest or provide advice T global exchanges hit a record services (PMS), portfolio managers | Portfolio managers can now for investment up to 25 per cent of high in 2019, a year punctuated by UNO offer customised investment invest in units of MFs only the assets under management of NSE's growth US President Donald Trump’s advice to clients, typically high net through direct plans such clients in unlisted securities. Twitter tantrums. According to was by far worth individuals. The regulator Portfolio managers cannot industry body Futures Industry the sharpest has disallowed portfolio managers invest client’s fund based on the Association (FIA), the global from charging upfront fees to to be paid in the first year. Fees also mission paid to distributors have advice of any other entity. exchange-traded derivatives markets clients, either directly or indirectly. include fixed fees charged annu- to be disclosed periodically to “With PMS becoming the rose 13.7 per cent to an all-time high In 2018, Sebi had done some- ally or a combination of fixed and clients. investment of choice for savvy of 34.5 billion contracts last year. thing similar for mutual funds variable fees computed as a per- Sebi has asked portfolio man- investors, these norms will strive The NSE was the top destination By rank Contracts traded* (in bn) Change (%) (MFs), banning upfront commis- centage of the profits generated. agers not to leverage the portfolio to strengthen the framework. This globally in terms of the number of sion, and asking the industry to Portfolio managers can now of clients for investment in deriva- is a highly sophisticated client seg- derivatives contracts traded. It piped NSE 5.96 57.3 adopt a full-trail model of paying invest in units of MFs only through tives and not indulge in specula- ment and enough operating free- US-based CME Group, despite the CME Group 4.83 -0.3 commission. This will impact dis- direct plans, and distribution-relat- tive transactions that are not dom to allow fund managers to latter operating several exchange B3 3.88 50.8 tributors as a portion of the upfront ed fees of any kind cannot be accompanied by actual delivery, innovate and come up with cut- subsidiaries, such as the Chicago fees was directly paid to them. charged to the client for such except for derivatives trades. This ting-edge investment solutions Mercantile Exchange and the New Intercontinental Exchange 2.26 -8.8 A PMS fee structure typically plans. Investors stand to benefit as is done with the intention of reduc- will be important,” said Vikaas M York Mercantile Exchange. Eurex 1.95 -0.2 includes set-up or upfront fees of their expenses will reduce. ing volatility in the market and Sachdeva, CEO of Emkay India’s largest bourse conducted 2-2.5 per cent and is a one-time fee Additionally, details of com- curbing undue risks, said experts. Investment Managers. trades of nearly 6 billion F&O con- CBOE Holdings 1.91 -6.8 tracts, 57 per cent more than the pre- Nasdaq 1.79 -5.8 vious year, shows the data. Total con- Overall global 34.47 13.7 tracts traded on CME stood at 4.8 Note: *In the futures and options segment (includes subsidiary exchanges) in 2019; change is over 2018 billion. In addition, total global open Source: FIA Sensex slips on tepid earnings, growth concerns interest (number of outstanding con- tracts) at the end of 2019 stood at 900 PRESS TRUST OF INDIA UltraTech Cement, Kotak Bank, and European markets. Global million, up 9 per cent from the previ- the equities market. tive research at Edelweiss, said the Mumbai, 21 January LOSING STEAM Bharti Airtel, HDFC, IndusInd agencies are slashing India's ous year-end. Trading activity in India Globally, the blow-hot, blow-cold launch of weekly options has result- Bank and ONGC ended with gains. growth rates as domestic demand was also underpinned by a spike in comments by Trump on the trade ed in the spurt in derivative volumes. The benchmark Sensex furthered Sectorally, the BSE power, growth has slowed down more volatility because of a host of global war with China infused volatility. He In a statement, the NSE attributed losses for the second straight ses- realty, metal, auto, utilities, than anticipated earlier. Earnings and domestic factors. The Nifty rarely shied away from tweeting on the jump in volumes to “deepening sion on Tuesday, as investors fret- FMCG, bankex and finance season has started and the swung 17 per cent during the year. sensitive topics, such as stock market of the equity markets”.“The NSE wit- ted over subdued corporate results indices ended up to 1.47 per cent, growth has not been very encour- Trading volumes are highly cor- levels, monetary policy, and trade nessed more than 12 million new reg- and the International Monetary while telecom, teck and energy aging from the few Nifty compa- related with volatility — a consistent deals. Analysts at JPMorgan even istrations in the cash equities seg- Fund (IMF) revising India’s growth indices settled in the green. nies that have declared their source for which were Trump’s tweet, developed a “Volfefe” index (coined ment in the last five years, of which forecast downwards. In the broader market, the BSE results so far,” said Hemang especially against China, which often on “covfefe”, a mysterious word in a 8.7 million were in the last three The Sensex closed down 205.1 MidCap fell 0.21 per cent, while Kapasi, portfolio manager (equity rocked the financial markets. Trump tweet in 2017). years. It is also observed that a third points or 0.49 per cent to 41,323.81. the BSE SmallCap closed flat. investment products), Sanctum The deceleration in economic and Deven Choksey, managing direc- of the new investors have come from The Nifty settled 54.7 points or 0.45 Besides rising concerns over Wealth Management. All eyes are earnings growth, coupled with the tor of KR Choksey Investment tier-3 and tier-4 towns. Another per cent lower at 12,169.85 — the growth in India, global investors now on the Budget and the gov- NBFC crisis, kept investors on the Managers, said while there were heartening feature is the adoption of third loss for the gauge in a row. turned risk-averse after confir- ernment’s initiatives to revive the tenterhooks last year. However, the many reasons for the volatility, the digital tools, with about 26 per cent The bourses also remained On the Sensex chart, Tata Steel mation of a deadly SARS-like lagging economy, he added. markets managed to overcome most uptick in volumes could be because of total trading activity in the cash under pressure tracking weaker was the top loser, shedding 3.01 per virus in China. The IMF on Monday lowered of the headwinds thanks to easy glob- of the increased use of algorithm- equities segment coming through global indices, following the out- cent, followed by M&M, Maruti, “The Indian markets contin- growth estimates citing stress in al liquidity. The corporation tax cut and machine-based trading. mobile and internet trading,” said break of a new deadly virus in Asian Paints, PowerGrid, ITC and ued to fall for third consecutive the NBFC sector and weak rural in September was a booster shot for Yogesh Radke, head of quantita- Vikram Limaye, MD and CEO, NSE. China that spooked investors. Axis Bank. On the other hand, day on the back of weak Asian income growth.

Sebi reaffirms THE COMPASS earlier ruling in Sahara case Ambuja, ACC may continue trailing larger peers PRESS TRUST OF INDIA Shree Cement, UJJVAL JAUHARI (all-India average market share of 20 per cent). New Delhi, 21 January UltraTech has consistently added capacities UltraTech likely to After witnessing demand pressure during the and, after completion of its acquisition of Binani The Securities and first three quarters of FY20, the Street now Cement, it is amalgamating and turning around Exchange Board of India benefit from any hopes for a recovery in cement volumes during capacities acquired from Century Textiles. (Sebi) on Tuesday reaf- the March quarter. Cement players, too, have UltraTech’s capacities have thus risen to firmed its ruling in the uptick in demand hiked prices in January anticipating a pick-up 117.4 mt, including overseas assets. Shree Sahara India Commercial in demand. Although the Street remains watch- Cement, with 38 mt capacity, remains the sec- Corporation (SICCL) case, ful of the sustenance of these price hikes, stocks ond-largest in terms of individual company- which had directed legal of cement firms have already started gaining. level capacity and average all-India market representatives of late Y N While UltraTech and Shree Cement have share of 8 per cent, shows the Kotak data. ACC Saxena to refund investors. risen 13-16 per cent since their December lows, and Ambuja, with 34 mt and 30 mt capacities, Saxena was SICCL’s direc- ACC and Ambuja Cements have lagged, with stood at third and fourth spot with 7 and 6 per tor from December 1998 to gains of 6-9 per cent. In fact, even on a longer cent market share, respectively. November 2012. The order time frame of six and 12 months, ACC and Analysts such as Binod Modi at Reliance relates to SICCL collecting Ambuja have lagged their peers. Securities, though, say that the Street is not fac- funds to the tune of ~14,106 The underperformance of LafargeHolcim toring in the 5.1 mt capacities of ACC coming crore between 1998 and group stocks can be attributed to the slower on stream by 2021. Hence, ACC could be con- 2009 from nearly 20 million pace of capacity additions by ACC and Ambuja. sidered on dips. investors through bonds — Though these two have announced capacity Even Ambuja Cements’ 3.6 mt clinker capac- optionally fully convertible expansions as well, they have lagged in terms ities coming on stream by September will debentures (OFCDs). of pace. Peers such as UltraTech and Shree improve its clinker-to-cement capacity ratio, Sebi had, in October 2018, Cement have continued ramping up capacities from 60 per cent at present. Nonetheless, this ordered the firm and its direc- on a regular basis and are seen to be major ben- is still over 8 months away. tors including Subrata Roy, O eficiaries of any uptick in demand. This is the In terms of per-tonne profitability, too, P Shrivastava, J B Roy, A S key factor behind the Street being more opti- UltraTech and Shree Cement have mostly been Rao, Ranoj Das Gupta, as well mistic on them. ahead. For the December quarter, too, analysts as legal representatives of late According to Kotak Institutional Equities’ at Centrum Broking expect UltraTech and Shree D S Thapa, late P S Mishra, data, with 95 million tonnes (mt) in capacity as Cement to report per-tonne profitability of ~996 and late Y N Saxena, to jointly of FY19, UltraTech was leading the industry and ~1,227, much higher than estimates of ~489 and severally refund the with the highest market share across all regions and ~800 for ACC and Ambuja, respectively. money collected through the issuance of OFCD. Following this, legal rep- resentatives of Saxena in Lower prices, production take sheen off HZL’s Q3 January 2019 submitted a preliminary application and UJJVAL JAUHARI account of a 5 per cent YoY fall The confidence stems from requested for all the relevant Lower grades at in mined metal production to the commissioning of under- documents and information Kayad, SK mines Hindustan Zinc’s (HZL’s) low- 235,000 tonnes, due to lower ground shaft at Rampura in the matter. Further, they er-than-expected net profit for grades at HZL’s Kayad and Agucha mines, while ore haul- had asked Sebi to grant them caused decline in the December quarter (Q3) led SK mines. ing from shaft will start in the an opportunity of hearing to a 1.9 per cent fall in its share The company, which is present quarter. after the inspection and output and sales price on Tuesday. switching to underground At Zawar mines, too, two detailed reply in the matter. While the overall metal pro- mining from opencast, also backfill plants are under com- According to Sebi, its duction was lower, volatility in faced some geological issues. missioning and expected to October 2018 order did not base metal prices continues to However, there is some commence operations from finally adjudicate the issues hurt the company’s financial improvement on a sequential February, said the company. or finally determine the lia- performance. basis, as mined metal produc- While efforts on volume bility qua Saxena, but was In Q3, the average zinc tion increased 7 per cent over growth are in the right direc- effectively in the nature of a prices on the London Metal the September quarter. tion and will yield results, cau- show cause notice to legal Exchange — $2,388 a tonne — Against this backdrop, tion persists on volatility in representative of Saxena. was down 9 per cent year-on- operating profit at ~2,288 crore base metal prices. Near-term “Thus, the present pro- year (YoY); it was up marginal- was down 20 per cent YoY, but challenges may also persist on ceedings are not against a ly by 2 per cent sequentially. 8 per cent higher over the cost of production, with rising deceased person but against Lead prices, however, have September quarter. coal prices and electricity duty the legal heirs of late Y N seen some recovery, and rose Consequently, net profit at by Rajasthan government on Saxena in their capacity as 4 per cent YoY and 1 per cent ~1,620 crore was down 27 per captive power generation. his legal representatives,” it over the September quarter. cent YoY, and was also lower Yet, given the over 20 per added. The regulator noted The price of silver — a than the consensus estimate cent correction since its April that Saxena was director byproduct of mining copper, of ~1,700 crore, according to 2019 highs and improving pro- when the entity raised lead, and zinc — rose 19 per Bloomberg. duction, analysts believe funds. Besides, he was a sig- cent YoY and provided some Moving forward, HZL India’s largest integrated zinc natory or authorising person respite. Yet, given the high expects to improve production producer — which is also avail- to the prospectus. Since he contribution of zinc, the com- and end FY20 at an exit rate of able at a high dividend yield gave his consent, he is liable pany’s total sales at ~4,672 1.2 million tonnes (mt) per of over 9 per cent (based on for violation under the crore declined 16 per cent YoY annum. The first nine months 2018-19 payout) — can be accu- Companies Act for the mis- in the quarter. have seen mined metal pro- mulated on dips by long-term statement and untrue state- The fall in sales was also on duction of 0.668 mt. investors. ments in the prospectus. MUMBAI | WEDNESDAY, 22 JANUARY 2020 THE SMART INVESTOR 11 . <

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27% in Q3 HAMSINI KARTHIK Since I-Pru Life is still in the invest- Mumbai, 21 January ment phase, as far as protection busi- JASH KRIPLANI ness is concerned, it can keep operating Mumbai, 21 January hen subsidiaries contribute costs elevated for a few more quarters close to a fourth of the overall and hence the net profit growth may HDFC Asset Management W valuation, their performance be quite lacklustre. In Q3, net profit grew Company (AMC) — which assumes as much importance as that by a measly 1.7 per cent despite the cor- is the country's largest asset of the parent company. In that sense, poration tax cuts. The silver lining is manager — reported profit the December quarter (Q3) was a mixed the fall in net profit, seen for most of before tax (PBT) of ~466 bag for ICICI Bank’s subsidiaries — FY19, appears to have arrested. As SAT maintains crore in the December namely ICICI Lombard, ICICI N S Kannan, chief executive officer, I- quarter, clocking growth of Securities (I-Sec), and ICICI Prudential Pru Life, puts it the focus now is on sta- 27 per cent on a year on year Life Insurance (I-Pru Life). bilising the financials. status quo in basis. “Degrowth seen in savings products For the nine-month peri- ICICI Lombard has been arrested in Q3,” he says. Given od ended December 31, 2019, Tepid participation from crop insur- EARNINGS SCORECARD STOCK MOVEMENT that I-Pru Life stock is the most pre- the PBT was up 38 per cent ance products resulted in gross written nOperating income nPre-tax profit ICICI Bank ferred subsidiary for investors, fast Axis-Karvy case to ~1,323 crore, compared to premium (GWP) staying flat year-on- nProfit after tax (~ cr) ICICI Lombard improvement in financials is key to sus- ICICI Prudential JASH KRIPLANI corresponding period in the year (YoY) at ~3,770 crore in Q3. (Figures in brackets indicate % change*) ICICI Securities tain interest in the stock. these shares there was indebt- previous year. Even excluding crop insurance, Mumbai, 21 January edness and the data needed At ~3.68 trillion, the GWP growth at 8 per cent lags industry 152.69 180 ICICI Securities to be re-examined. company's market share at growth of 13 per cent for the quarter. 163.82 With 4 per cent revenue growth in Q3, The Securities Appellate In its order, Sebi said the the end of the quarter Much of the underperformance may (8.7) I-Sec’s results were a surprise as it Tribunal (SAT) has extended transfer of unpaid client under review stood at 14.4 be attributed to ICICI Lombard’s 50 (16.4) 140 arrested the trend of revenue decline its status quo order in case of shares worth ~13.69 crore, (8.1) (4.1) (23.0) (-1.2) 8,131 per cent. per cent dependence on motor insur- (1.8) 100 seen for four quarters in a row. Net Axis Bank and Karvy Stock which were pledged in favour (17.1) (35.6) The company continued ance — own damage (OD) and third- 2,456 146.02 profit growth of 36 per cent is also the Broking till January 31. of Axis Bank by Karvy, can be 422 390

322 100 294 to see lower fees and com- party (TP) policies, with a larger share 302 best since listing. On January 15, Axis Bank allowed if the bank is able to 185 137 mission expenses. In the of 27 per cent taken by motor OD plans. 150.07 Many factors, including the had moved SAT seeking relief furnish proof of authorisation December quarter, the However, offsetting weakness in crop ICICI Lombard ICICI Pru-Life ICICI Securities October to December period, being against an order passed by the by each client. expenses had fallen 87 per insurance, the general insurer saw bet- For the quarter ended December 2019 60 favourable for the equity markets Securities and Exchange Sebi’s whole-time member cent to ~71 crore, compared ter contribution, especially from *year-on-year change; financial figures rounded off Jan 1,’19 Jan 21,’20 helped the broker. Efforts to lean on Board of India (Sebi), which also observed that pledging of Source: Capitaline; Compiled by BS Research Bureau to the same period in the pre- health and motor TP products. Source: Exchange ICICI Bank’s customer pool, especially stated pledging of shares by securities of unpaid clients ceding year. However, it wasn’t enough to arrest its affluent clients, has also helped I- Karvy— where the clients had required “explicit authorisa- The ratio of equity orient- the shrinkage of 100 basis points (bps) focus on profitable segments, such as in-progress. The share of protection Sec increase its market share (based “fully-paid” — was legally tion” from each client, and ed assets under manage- in the overall market share to 8 per health, and defocus from the crop policies at 14 per cent and that of unit- on active customer base) to 10 per cent invalid. power of attorney (PoA) given ment (AUM) and non-equity cent in Q3. insurance business, along with linked insurance policies (ULIPs) for in Q3, from 8.1 per cent a year ago. The Following this, SAT had by the clients was not suffi- oriented AUM was 46:54, The positive factor was the favourable regulation on motor insur- the first time falling below the 80-per introduction of products, such as granted interim relief to Axis cient authorisation to create compared to the industry increased share of retail products in ance, will remain the earnings driver cent mark to 68.5 per cent in Q3 indi- Prime and employee stock ownership Bank, as in the past National such a pledge. ratio of 41:59. motor and health insurance to 72 per for ICICI Lombard in the medium cate the company’s intent to remain plan) financing, is also helping expand Securities Depository had Axis Bank in its arguments Improving mix of equity cent vis-à-vis 65 per cent seen last year. term. focused on higher-margin protection the customer base. reversed securities to clients had said that the PoA was suf- products is a positive for an New tie-ups with Standard Chartered products. Overall, I-Pru Life grew its “Some of the recent regulatory on the basis of Sebi’s ficient authorisation, the AMC as equity products Bank and Karur Vysya Bank seem to ICICI Prudential Life value of new business (VNB) 25 per changes are also favourable, though November 2019 order pertain- order pointed out. offer higher management be working well. However, the increas- I-Pru Life is the meatiest among ICICI cent YoY in Q3 to ~910 crore. What’s we still need a conducive (equities) ing to the Karvy case. Axis Bank had extended an fees than fixed income ing share of retail products is taking Bank’s subsidiaries, accounting for 11 good is that the VNB margin (a prof- market,” says Vijay Chandok, manging The Sebi in its order had overdraft facility to Karvy products. In beyond the the lid off operating expenses ratio, per cent of the bank’s valuation. Some itability indicator) reached 21 per cent director, I-Sec. Even if not many ana- identified ~171.74 crore worth Stock Broking, against which top-30 (B-30) cities, the which rose to 24 per cent in Q3, from of the changes undertaken in in Q3, from 17 per cent in the year-ago lysts have coverage, CLSA and Antique of shares where clients had the share pledges were creat- company held the market 20 per cent in the previous year. September 2018 are giving positive quarter, though there is room to catch Stock Broking have retained their fully-paid the dues. Axis Bank ed. Karvy owed ~80.47 crore share of 12.6 per cent. Analysts at JM Financial believe that results, though they remain a work- up with 22-24 per cent margin of peers. “buy” recommendation on I-Sec. had submitted that even in to Axis Bank.

COMMODITIES1 > Govt looking at proposal Textile exports fall 8% during Apr-Nov

to cap edible oil imports DILIP KUMAR JHA Mumbai, 21 January IMPORT MOVE Experts suggest cap of 15 mt, creating oilseed development fund Textile & allied products Despite recovery in shipments to the Figures in $ bn nExport nImport RAJESH BHAYANI US, the country’s textile and apparel > PRICE CARD Mumbai, 21 January exports fell by 8 per cent in the first FY14 37.0 OILSEED SECTOR: eight months (April-November) of the 4.8 s reliance on imported edible oil current fiscal year, with contractions 37.1 is growing, India needs to relook BALANCE SHEET in those to the European Union (EU) FY15 As on Jan 21 International Domestic 5.5 ------at ways to address it to improve Area under oilseed 26-27 mn Ha and West Asia. # # A Price %Chg Price %Chg domestic availability. Two thirds of the On the other hand, textile and 36.0 cultivation FY16 domestic demand is met by imported apparel imports in the period jumped 5.3 METALS ($/tonne) oil and this is considered very high. Average yield 1,000-1,100 kg 15 per cent, compared to the previous 35.8 Aluminium 1,807.0 4.1 2,064.3 8.0 Experts have suggested creating an Average production 28-30 mt year. FY17 oilseed development fund while looking The data compiled by the 5.5 Copper 6,245.0 7.3 6,544.0 8.8 at the possibility of permitting genetically Population 1.32 billion Directorate General of Commercial 36.0 modified (GM) oilseeds to raise domestic Intelligence and Statistics under the FY18 Zinc 2,461.0 -1.6 2,626.0 -0.1 Per capita 17.5 kg availability. So far, government policies Union Ministry of Commerce and 6.4 Gold ($/ounce) 1,557.2* 4.9 1,740.8 4.3 have focused on restricting imports and consumption Industry showed India’s exports at $21.7 FY19 36.9 Silver ($/ounce) 18.0* 2.5 20.3 2.7 some tariff measures. Domestic oil 7.5 to 8 mt billion (~1.54 trillion) for the period, 6.8 “The government is seriously con- production down over 8 per cent from $23.6 billion ENERGY cerned about stagnant oilseeds produc- in the corresponding period last year. FY20* 21.7 Current demand 23 to 24 mt Crude Oil ($/bbl) 63.6* 8.7 65.1 9.3 tion and the rising import of edible oils The imports stood at $5.5 billion this 5.5 to the tune of 15 million tonnes (mt) per year versus $4.6 billion last year. Import 15 million *(up to Nov) Compiled by BS Research Bureau Natural Gas ($/mmBtu) 1.9* -13.8 1.9 -13.3 annum, costing the exchequer over “India’s export of textiles and cloth- Source: DGCIS ~75,000 crore. To increase production Source: The Solvent Extractors’ Association of India ing were severely affected by global AGRI COMMODITIES ($/tonne) of oilseeds from the current 30 mt to situations like the trade conflict of the Wheat 200.1 14.3 299.8 3.1 over 47 mt by 2024-25, the government US with China, the EU’s struggle with ment of the new scheme, Remission plans to launch the national mission on Brexit, growing geopolitical tensions of Duties or Taxes on Export Products, Maize 192.1* 4.2 278.3 -11.9 edible oil programme in the next three However, till India improves produc- oil palm cultivation are other major rec- in Middle East (West Asia) and is set to result in a further 3-4 per cent Sugar 399.4* 18.4 489.2 -0.1 months,” said Atul Chaturvedi, presi- tivity and production of seeds, reduction ommendations. removal of the Generalized System of contraction in apparel exports. dent of the Solvent Extractors in import will be difficult. SEA’s proposal Palm oil is a major edible oil now Preferences (GSP) benefits to India by Many textile players signed export Palm oil 765.0 43.0 1,223.5 41.5 Association (SEA) of India. for capping imports at 15 mt now and grad- and total potential area for oil palm cul- the US,” said K V Srinivasan, chairman, contracts on expectations of continu- Cotton 1,556.2 9.3 1,619.9 0.6 Sources in the industry, however, said ually reducing it over the years will be pos- tivation in India is 1.9 million hectares. Cotton Textile Export Promotion ation in the Merchandise Exports from

* As on Jan 21, 20 1800 hrs IST, # Change Over 3 Months that the Budget for 2020-21 may allocate sible only if “GM seeds are permitted in Area under oil palm is about 300,000 Council (Texprocil). India Scheme (MEIS), and Remission Conversion rate 1 USD = 71.2 & 1 Ounce = 31.1032316 grams. funds for this mission. India”, said the association. hectares. Andhra Pradesh accounts for Under the GSP, developed coun- of State Levies scheme. The delay in Notes: According to data from SEA, India’s Globally, many countries have allowed more than 55 per cent of the total cov- tries grant import duty concessions, announcement has blocked working 1) International metals, Indian basket crude, Malaysia Palm oil, Wheat LIFFE and Coffee Karnataka robusta pertains to previous days price. average oilseeds production in the last use of GM oilseeds and oil made from erage. in addition to prioritising purchase of capital of exporters.” 2) International metal are LME Spot prices and domestic metal are Mumbai local spot prices except for Steel. few years has been 28-30 mt and produc- them are finding their way into India. If the government exempts land iden- textile and apparel products from Srinivasan said: “Cotton yarn 3) International Crude oil is Brent crude and Domestic Crude oil is Indian basket. tion of edible oil is 7.5 to 8 mt. Production Soybean oil imported from Argentina tified as suitable for oil palm from the some countries. bears the same incidence of state and 4) International Natural gas is Nymex near month future & domestic natural gas is MCX near month futures. and refining in India was also lower and rapeseed oil from Canada also land ceiling Act, it will speed up expan- India’s apparel export to the US central levies, similar to made-ups 5) International Wheat, White sugar & Coffee Robusta are LIFF E future prices of near month contract. because of high imports. include oil made from GM seeds. sion. rose 6 per cent to $2.7 billion in April- and garments. Therefore, cotton yarn 6) International Maize is MATIF near month future, Rubber is Tokyo-TOCOM near month future and Palm oil is Malaysia FOB spot price. In the current year, crude palm oil Even without the government permis- If the total potential area is brought November, compared to $2.6 billion should be covered under the Rebate 7) Domestic Wheat & Maize are NCDEX future prices of near month contract, Palm oil & prices have increased almost 50 per cent sion, Indians consume edible oil made under oil palm, domestic production of in the same period last year. of State and Central Taxes and Levies Rubber are NCDEX spot prices. 8) Domestic Coffee is Karnataka robusta and Sugar is M30 Mumbai local spot price. in last six months in the international from GM seeds. crude palm oil may touch around 6.7-7 Rahul Mehta, chief mentor of the Scheme and MEIS schemes, and also 9) International cotton is Cotton no.2-NYBOT near month future & domestic cotton is MCX Future prices near month futures. market. This has helped in the curtail- Tax concessions for companies sup- mt from 285,000 tonnes now, according Clothing Manufacturers Association under the 3 per cent interest equali- Source: Bloomberg Compiled by BS Research Bureau ment of imports. porting oilseeds farming and promoting to SEA. of India, said: “The delay in announce- sation scheme.” 16 MUMBAI | WEDNESDAY, 22 JANUARY 2020 1 >

N DAVOS 2020 N Need to have fairer, more equitable Trump urges countries terms in trade relations, says Goyal to‘putowncitizensfirst’ ONLYWHEN

REUTERS GOVTS PUT Union minister says RCEP, in its present form, is clearly an unworkable agreement he asserted. Goyal was speaking at a Strategic THEIR OWN Outlook session on The Indian Ocean Rim. PHOTO: CITIZENS PRESS TRUST OF INDIA ling the important issue of climate change. be dictated by diplomacy, Goyal said, refer- “We are like a pivot for the Indian Ocean FIRST WILL Davos, 21 January Goyal said the Regional Comprehensive ring to India’s decision to and we believe this region has huge PEOPLEBE Economic Partnership (RCEP) in its pull out of the RCEP. potential. At the same time, India is FULLY nion Minister Piyush Goyal on present form was clearly an unwork- The RCEP has very much concerned about the issue INVESTED Tuesday said India is working on able agreement. had to factor in sev- of climate change.” IN THEIR U ways to have fairer and more equi- “Any pact needs to take into eral diversities among Goyal further said, “We, in India, NATIONAL table terms in its trade relationships with account several factors. India is grap- partners, but India are also working on how to put in FUTURES” various countries. Speaking at the World pling with a huge trade deficit, partic- has serious concerns about cli- place more equitable terms in our trade rela- Economic Forum Annual Meeting 2020, the ularly with China and many other mate change and is seeking tions with various countries.” The Indian commerce and industry minister also called nations in the region,” he said. greater cooperation on fair terms, Ocean Rim sees two-thirds of the world’s oil for greater cooperation among various For the first time, shipments pass through its waters and is US President Donald Trump on tion and average unemployment rate is nations to realise the huge growth prospects India demonstrated Piyush Goyal, home to half of the world’s container ships Tuesday said the US is in the midst of the lowest for the tenure of any US in the Indian Ocean region and also for tack- that trade cannot Union minister that support 2.7 billion people. an economic boom that has never been President in history. seen before anywhere in the world. “Every decision we make on taxes, The American dream is back and trade, regulation, energy, immigration, it's better than ever and there is no one education and more is focused on VOICES Poorsocialmobility, inequality better than the American middle class improving the lives of everyday today, Trump said. In a special address Americans,” he added. “Only when at the World Economic Forum (WEF) governments put their own citizens

REUTERS annual summit, he said since he last first will people be fully invested in recognisedasacrisisatsummit addressed Davos two years ago, the US their national futures.” He also noted

PHOTO: has enjoyed the “great American come- that the new trade deal initiated with PRANJAL SHARMA (15th), the United Kingdom (21st), the back” that he had predicted. China is very important. “Today I urge Davos, 21 January SOCIALMOBILITYINDEX United States (27th), and Italy (34th). “Today I am proud to declare that other nations to follow our example Rank Country Value(0–100) Among the large emerging economies, the United States is in the midst of an and liberate your citizens from the Globalisation’s fundamental pillar is mobil- 1 Denmark 85.2 the Russian Federation is the most socially economic boom the like of which has crushing weight of bureaucracy,” ity — a world where ideas, people, goods, mobile of the BRICS grouping, ranking 39th never been seen before,” he said. Trump said. “With that, you have to “ATOM BOMBS WERE THE and services can cross borders with ease 2 Norway 83.6 with a score of 64 points. The next is China, According to him, 11 million jobs have run your own countries the way you BIGGEST FEAR ONCE, BUT and efficiency. Even as the world struggles 3 Finland 83.6 which ranks 45th, followed by Brazil (60th), been gained by America since his elec- want.” AGENCIES NOW THERE IS FEAR OF to push globalisation without its negatives, 4 Sweden 83.5 India (76th), and South Africa (77th). ARTIFICIAL INTELLIGENCE. a key agendum for the Davos summit is The poor ranking of India should trigger PEOPLE MUST REALISE social mobility. 5 Iceland 82.7 a deeper response from policymakers. This A lot has happened, but nothing The World Economic Forum (WEF) has 6 Netherlands 82.4 is yet another ranking where India needs a THAT THE DEVELOPMENT OF created a Social Mobility Index, which “is strong policy intervention. 7 Switzerland 82.1 TECHNOLOGY IS FOR GOOD” designed to provide policymakers with “Globalisation and the Fourth Industrial has been done as yet: Thunberg means to identify areas for improving social 8 Austria 80.1 Revolution have generated significant ben- REN ZHENGFEI, FOUNDER & CEO, HUAWEI mobility and promoting equally shared 9 Belgium 80.1 efits, but have also exacerbated inequali- Young climate campaigner Greta Thunberg on opportunities in their economies, regardless ties. The Fourth Industrial Revolution, and Tuesday said a lot has happened since her campaign of their development”. 10 Luxembourg 79.8 with it, continuing and future disruption to REUTERS caught eyes of the world but “nothing has been done” A key finding from the index is that 76 India 42.7 labour markets, will likely compound dif- actually to save the planet. irrespective of the size and maturity of the ferences in social mobility for those coun- PHOTO: “In one aspect, lots has happened since last year. 0 20 40 60 80 100

BLOOMBERG/FILE economy, most countries have a poor tries unprepared to take advantage of new The mass mobilisation of young people around the record of social mobility. Despite the focus Sources: World Economic Forum, Social Mobility opportunities,” says the report with refer- world has put climate at the top of the agenda,” the Report 2020

PHOTO: on meritocracy, an average individual ence to emerging economies. 17-year-old campaigner from Sweden said here at doesn’t have the freedom to make liveli- Add to this the inequality report by the WEF Annual Meeting. hood choices. “An individual’s opportu- equal opportunity be measured effectively? Oxfam and the global situation appears “People are more generally aware now. The cli- nities in life remain tethered to their socio- These questions are posed to policymakers. dire. The world’s richest 1 per cent have mate and the environment is a hot topic. But —and “WE ARE JUST AGAIN IN THIS economic status at birth, entrenching The index shows that only a handful of more than twice the wealth of 6.9 billion it’s a big but: From another perspective, pretty much CRAZIEST MONETARY AND historical inequalities,” says the WEF countries have the right conditions for people. Women’s unpaid care work has a nothing has been done,” she said. FISCAL MIX IN HISTORY. report on social mobility. social mobility. The top five, unsurprising- monetary value of $10.8 trillion per year. It is just the “very beginning” and a lot needs to be IT’S SO EXPLOSIVE. IT The WEF Social Mobility Index bench- ly, are Nordic countries — Denmark, This is three times the size of the world’s done given the ever increasing greenhouse gas emis- marks 82 countries to help policymakers Norway, Finland, Sweden, and Iceland. tech industry. Davos is the mecca of capi- sions, she said. DEFIES IMAGINATION” assess whether their citizens have equal Among the G7 economies, Germany is talism, but it is now genuflecting to social Thunberg also said she can’t complain about not PAUL TUDOR JONES, BILLIONAIRE INVESTOR economic opportunities. Can a child have a the most socially mobile, ranking 11th with issues. Perhaps a realisation is dawning that being heard as she is a person who is being heard all (TO CNBC AT THE WEF) better life than his/her parents? Can the 78 points, followed by France at 12th posi- an unequal society also means reduced con- the time, drawing applause from the audience. impact of socio-economic background on tion. Canada ranks 14th, followed by Japan sumers and global demand. PTI

Auction house to sell NiravModi’s assets again

Mumbai-based Saffronart will auction Nirav Modi’s assets next month, which the Enforcement Directorate had seized. More than 100 lots, including paintings, watches, hand- bags, and cars belonging to the fugitive dia- mantaire, will go under the hammer in a live auction on February 27, and online sales on March 3 and 4 this year. Among the items to be sold is a figurative painting by Amrita Sher-Gil, dated 1935, which has never been bid and is expected to fetch ~12- 18 crore. An oil-on-canvas from M F Husain’s series on the epic Mahabharata is also esti- mated to bring in ~12-18 crore. The selection features 25 Swiss timepieces by the likes of Jaeger-LeCoultre and Girard- Perregaux, and some 80 handbags, including from the Birkin and Kelly lines of Hermès. The items are in the process of being catalogued. The total sale estimate will be announced in late January, says Saffronart. RANJITAGANESAN